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The Guardian - US
The Guardian - US
World
Gloria Oladipo

University of Chicago to pay $13.5m to settle ‘price-fixing cartel’ financial aid lawsuit

University of Chicago.
University of Chicago. Lawsuit alleges that universities ‘participated in a price-fixing cartel designed to reduce or eliminate financial aid as a locus of competition’. Photograph: dbimages/Alamy

The University of Chicago has agreed to pay $13.5m to students after settling a claim that it conspired with other universities to intentionally limit financial aid offers for students.

The top-ranked university is one of 17 elite colleges that were accused of restricting financial aid packages for students, according to a federal lawsuit filed last year, Insider reported.

The class-action lawsuit was filed against the 568 Presidents Group, an association of universities and colleges that practice need-blind admissions.

The suit argued that colleges within the group took advantage of an anti-trust exemption that allowed universities to create standards for granting financial aid packages if they were “need blind”.

Universities that used the exemption were not truly “need blind”, the complaint argued, and found ways to consider a prospective student’s wealth when making admissions decisions.

The suit alleges that universities “participated in a price-fixing cartel that [was] designed to reduce or eliminate financial aid as a locus of competition”.

Plaintiffs of the suit further argued that tuition rates were artificially inflated for thousands of students due to the unlawful price fixing, with more than 170,000 financial-aid recipients allegedly “overcharged … at least hundreds of millions of dollars”.

The proposed settlement from University of Chicago was first announced in April, Reuters reported, though the details of the agreement were not disclosed.

University of Chicago is the first university to reach a settlement with the plaintiffs, five former undergraduate students of Northwestern University, Vanderbilt University and Duke University.

Other universities named in the lawsuit, including Yale University and Cornell University, have not announced plans for similar settlements.

University of Chicago has agreed to pay students who attended the university from 2003 until the settlement period, received financial aid, and had to pay for tuition, room, or board that was not covered by aid, Insider reports.

The settlement still requires approval from the US district court for the northern district of Illinois.

In a statement to the Guardian, a University of Chicago spokesperson said that the university is “committed to removing financial barriers for undergraduate students who are admitted to the College” and remains proud of its financial aid offers.

“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,” read the statement.

The settlement comes amid the overturning of affirmative action by the supreme court in June, which ignited renewed discussions of equitable college admissions processes.

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