University of Chicago Agrees to $13.5 Million Settlement in Financial Aid Antitrust Case

The University of Chicago has agreed to pay $13.5 million to settle a lawsuit in which it was accused of illegally colluding with other top universities to limit financial aid to students, making it the first defendant in the case to settle, according to a court filing Monday. 

The lawsuit, filed in Illinois federal court in January 2022, accuses 17 colleges and universities, including most members of the Ivy League, Duke University, Vanderbilt University and the California Institute of Technology, of engaging in price fixing by using a shared methodology to calculate applicants’ financial need. 

Under a decades-old federal antitrust exemption that expired in the fall, schools were allowed to collaborate on their aid formulas, but only if they didn’t consider applicants’ financial circumstances in their admission decisions. The suit alleged that these schools do weigh applicants’ ability to pay in certain circumstances, including by giving an edge to children of wealthy donors or when considering who to admit from wait lists. As a result, the suit says, the schools shouldn’t have been eligible for the antitrust exemption. 

The schools worked together under what was called the 568 Presidents Group, a reference to the section of the 1994 legislation that provided the exemption. The University of Chicago withdrew from the group around 2014, which plaintiffs say set it apart from the other defendants who remained involved. The group dissolved last year. 

The University of Chicago said in a court filing that its settlement isn’t an admission of liability, but that settling would allow the school to avoid the distraction and expense of continued litigation.

Separately, spokesman Jeremy Manier said Monday that the school 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,” he said. 

The other 16 schools continue to deny the allegations in court. The schools moved to have the lawsuit dismissed last year. The Justice Department weighed in urging the judge not to dismiss the suit, and the judge has allowed discovery to proceed. 

Attorneys for the eight named plaintiffs said the settlement funds would benefit all students in the proposed class of plaintiffs, not just those who attended the University of Chicago. The proposed group includes roughly 200,000 members who attended the schools going back up to 20 years, according to a court filing Monday. 

The University of Chicago agreed in the settlement to provide documents to the plaintiffs and detailed information about the school’s financial aid practices and those of other schools named as defendants. Plaintiffs say that will help them pursue the cases against the other 16 schools. 

The settlement must still be approved by the Illinois federal judge overseeing the case. 

Write to Melissa Korn at [email protected]