Yale, Duke and Columbia elite schools to settle price-fixing case

For nearly a quarter-century, the nation's most elite universities had a legal shield: When they shared formulas for measuring prospective students' financial need, they were exempt from federal antitrust laws.

But the arrangement includes an important requirement: The admissions processes of cooperating universities are “need-blind,” meaning they cannot factor in whether a prospective student is wealthy enough to pay.

In a court filing filed Tuesday night, those five universities — Brown, Columbia, Duke, Emory and Yale — agreed to pay a total of $104.5 million, alleging that they actually weighed financial prowess when they deliberated on the rule. of some applicants.

While the universities have not admitted wrongdoing and contested accusations that their approach hurt students, the settlements nonetheless question whether the schools, which spent years praising the generosity of their financial aid, did enough to lower tuition.

After the court filing, Columbia and Brown denied wrongdoing in separate statements and said all financial aid decisions were made in the best interests of students and their families. Brown said settling the case would allow it to “focus its resources on helping students more generously.”

The five universities' deals come months after the University of Chicago agreed to pay $13.5 million. Other schools, including Cornell, Georgetown, Johns Hopkins, MIT and the University of Pennsylvania, remain mired in the lawsuit, with no trial date set.

Spread out case 568 leaders targeted 17 schools that were or were members of the group, named for statutes that provide antitrust protections. The suit argued that universities did not actually adhere to the need-blind admissions mandate when they considered waiting-listed applicants, making their financial aid policies illegal.

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Vanderbilt University, for example, said on one of its websites in 2018 that it reserves “the right to recognize need when admitting wait-listed students,” echoing earlier statements by university staff.

Vanderbilt, based in Nashville, said it planned to settle in court last year.

The suit argued that the universities were violating the terms of their antitrust exemption by considering the requirement in either context. The case drew muscle from the legal doctrine that members of a group are liable for the actions of others in the same group, complicating the path for universities.

Ultimately, the suit said, about 200,000 students were overcharged over nearly two decades because the 568 group eliminated competition on costs, “artificially inflating” the net cost of attendance.

If universities had competed more aggressively on financial aid, students might have received more support and spent less to attend college, the lawsuit said.

The Hopeless Shield expired in 2022, and the 568 Group was disbanded.

The University of Chicago has agreed to share valuable records in lawsuits against other universities, though it said it was “unmerited” when it settled the case.

A handful of other universities have made similar calculations, admitting no wrongdoing when it comes to limiting both their financial exposure and damaging disclosures in records or depositions.

“While we believe the plaintiffs' claims are without merit, we have reached a settlement through our continued focus on providing talented scholars from all social, cultural and economic backgrounds with the world's best undergraduate education and opportunity to graduate debt-free,” Vanderbilt, which is still finalizing its settlement, said in a statement.

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For plaintiffs, planned settlements offer an advantage beyond the surge of money between students and attorneys: By reducing the ranks of defendants, they streamline a case that can prove exceptionally complex during a trial.

Both Emory and Yale are expected to pay $18.5 million, and Brown has settled for $19.5 million. Columbia and Duke agreed to pay $24 million each. Separately from Tuesday's filing, Rice University said In the latest financial report It agreed to pay nearly $34 million.

In their filing on Tuesday, attorneys for the plaintiffs said the settlements “were not reached as a group or simultaneously, but rather were pursued separately over time.” The attorneys said, “By pursuing a strategy of increasing the settlement amount with each successive agreement or set of agreements, we risk having non-settling defendants pressure or wait to reach an immediate settlement and pay significantly more.”

Financial aid practices at elite universities have long been the subject of antitrust scrutiny. In the late 1980s, the Justice Department began investigating price-fixing, leading to several settlements in the 1990s as Ivy League schools tried to stave off titanic legal battles. (MIT initially rejected a settlement and opted for a trial. It later reached an agreement with the government, and the settlement language became the template for Section 568.)

In a filing last year, the Justice Department signaled its support for some of the legal arguments underlying the current civil lawsuit the schools are settling.

Stephanie Saul Contributed report.

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