University of Chicago settles lawsuit for $13.5m over alleged financial aid price-fixing cartel

The University of Chicago has reached an agreement to pay $13.5 million to students as part of a settlement in a lawsuit claiming that the institution collaborated with other elite colleges to deliberately restrict financial aid offerings.

“The lawsuit, filed last year, accused 17 prestigious universities, including the University of Chicago, of conspiring to limit financial aid packages for students”.

The legal action targeted the 568 Presidents Group, an organization of universities and colleges practicing need-blind admissions. The lawsuit argued that these colleges exploited an anti-trust exemption, which allowed them to establish financial aid standards while maintaining a “need-blind” approach. However, it was alleged that these institutions were not genuinely “need blind,” as they found ways to consider a student’s wealth during admissions decisions.

The lawsuit contended that these universities were part of a “price-fixing cartel” designed to diminish financial aid competition. Plaintiffs claimed that this unlawful price fixing artificially inflated tuition costs for thousands of students, resulting in alleged overcharges of “at least hundreds of millions of dollars” for more than 170,000 financial aid recipients.

The settlement was revealed in April by the University of Chicago, though specific terms were not disclosed. This university is the first to reach a settlement with the plaintiffs, who include former undergraduate students from Northwestern University, Vanderbilt University, and Duke University.

“While the University of Chicago has taken steps toward resolving the issue, other institutions, such as Yale University and Cornell University, have not yet announced similar plans. The settlement requires approval from the US district court for the northern district of Illinois before becoming final”.

“A University of Chicago spokesperson defended the institution’s commitment to facilitating access to education and expressed confidence in the university’s financial aid programs. The spokesperson stated, “The University believes the plaintiffs’ claims are without merit. We look forward to putting this matter behind us and continuing to focus our efforts on expanding access to a transformative undergraduate education.””

“The settlement emerges amid recent debates surrounding equitable college admissions procedures, particularly following the Supreme Court’s June decision to overturn affirmative action policies. This ruling has reignited discussions about ensuring fairness in the college admissions process”.