University of Chicago First To Settle “Price-Fixing Cartel” Case, Pays $13.5 Million
In a groundbreaking development, the University of Chicago has taken the lead among 16 prestigious institutions in resolving allegations related to a controversial financial aid practice.
In January 2022, a lawsuit was filed by five former undergraduate students hailing from Duke, Northwestern, Vanderbilt, and other institutions against 16 schools including UChicago, Yale, Brown, and Northwestern. The focal point of the suit was the 568 Presidents Group, an entity facilitating collaborative efforts among schools to establish uniform standards for allocating financial aid.
The lawsuit claimed that these schools had participated in an alleged “price-fixing cartel,” aimed at diminishing competition in the realm of financial aid. This alleged cartel was accused of artificially inflating the net cost of attendance for financially aided students, while favoring wealthier applicants. The plaintiffs contended that over 170,000 students were potentially overcharged by hundreds of millions of dollars.
The legal action primarily targeted an antitrust exemption outlined in Section 568 of the Higher Education Act. This exemption permitted schools to coordinate on financial aid models if they operated on a “need-blind” basis, implying that a student’s financial capability would not influence the admission decision. The lawsuit asserted that these institutions, contrary to their claims of being “need-blind,” found ways to consider the financial contributions prospective students could make.
The University of Chicago recently made a significant stride by agreeing to a $13.5 million settlement, pending approval from the US District Court for the Northern District of Illinois. The proposed settlement encompasses cash disbursements to students who attended full-time undergraduate programs at the named institutions, received financial aid, and directly paid for tuition, fees, or accommodations not covered by aid. The settlement encompasses students from different periods:
- Those who attended UChicago, Columbia, Cornell, Duke, Georgetown, MIT, Northwestern, Notre Dame, Penn, Rice, Vanderbilt, and Yale from 2003 through the settlement date
- Those who attended Brown, Dartmouth, or Emory from 2004 through the settlement date
- Those who attended Caltech from 2019 through the settlement date
- Those who attended Johns Hopkins from 2021 through the settlement date
A comprehensive communication campaign will be launched to notify eligible members of the settlement class about these relief measures. A dedicated settlement website and toll-free number will be available for further information and updates on the cash disbursements.
“We look forward to putting this matter behind us and continuing to focus our efforts on expanding access to a transformative undergraduate education,” remarked the University of Chicago in an official statement.
The settlement’s final approval now rests with the court. It’s important to note that the implicated institutions have not admitted any wrongdoing in connection with this settlement.
A recent study conducted by Opportunity Insights, a research group comprised of Harvard researchers and policy analysts studying inequality, has shed light on the unequal admissions landscape of elite universities in the United States. According to the study, children hailing from the top 1% of financially well-off families are more than twice as likely to secure a spot at these prestigious institutions compared to their middle-class counterparts, even if they possess comparable SAT and ACT scores.
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