Dartmouth, Rice, Northwestern and Vanderbilt settle financial aid lawsuit

Dartmouth College, alongside Rice, Northwestern and Vanderbilt universities will pay a total of $166 million to settle a two-year-old lawsuit accusing them of colluding to limit financial aid for admitted students, according to a Friday court filing.

This marks the latest round of settlements in a class-action lawsuit against 17 elite schools, including most members of the Ivy League. Eight former students in 2022 accused the schools of using a shared methodology to calculate financial need in a way that reduces institutional dollars to students from working- and middle-class families. Their attorneys say some 200,000 students have been affected by the practice in the past 20 years.

All of the schools involved in the case have denied the allegations, but many have chosen to resolve the claims to put the lawsuit behind them. Ten universities have now settled, including Columbia and Yale, for a total of $284 million. Proceeds will be used to provide cash payments to the entire class of affected undergraduate students, not just those who attended the schools that have settled.

“These new settlements will significantly increase the compensation to the class members,” said Ted Normand, a partner at Freedman Normand Friedland, which is representing the former students along with the firms Berger Montague and Gilbert Litigators & Counselors.

Dartmouth and Rice have each agreed to pay $33.8 million, while Vanderbilt will pay $55 million and Northwestern will pay $43.5 million to resolve the charges. Rice had previously revealed the agreement in financial records, as had Vanderbilt.

More elite universities settle suit over alleged ‘price-fixing’ aid policies

The four settlements are pending a judge’s approval.

Dartmouth and Rice did not immediately respond to requests for comment. Vanderbilt and Northwestern insist they did nothing wrong and say the claims are baseless.

“The university has agreed to settle this case – without admitting liability – so that we can put this matter behind us and focus on Northwestern’s global eminence, excellent teaching, innovative research, and the personal and intellectual growth of our students,” Jon Yates, a spokesman for Northwestern, said in a statement.

Northwestern said more than 60 percent of its undergraduates receive financial aid, which amounted to almost $290 million last academic year. Vanderbilt, meanwhile, said it spent $244 million on financial aid for undergraduates last year. The school fully covers undergraduate tuition for nearly every family with an income of $150,000 or less.

“Though we believe the plaintiffs’ claims are without merit, we have reached a settlement in order to maintain our commitment to the privacy of our students and families and keep our focus on providing talented scholars from all social, cultural and economic backgrounds one of the world’s best undergraduate educations,” said Julia Jordan, a spokeswoman for Vanderbilt.

The lawsuit initially named 16 defendants: Yale, Columbia, Duke, Brown, Emory, Georgetown University, the California Institute of Technology, Northwestern University, Cornell University, Dartmouth College, the University of Pennsylvania, Vanderbilt University, the Massachusetts Institute of Technology, the University of Notre Dame, Rice University and the University of Chicago. Johns Hopkins University was later added.

The schools named in the lawsuit worked together in the 568 Presidents Group, a collection of highly selective institutions that collaborated on aid formulas. The group, which formed in the late 1990s, dissolved after the lawsuit was filed.

The class-action lawsuit is tied to a 1994 federal antitrust exemption that allowed colleges to collaborate on financial aid guidelines. The exemption applied only if schools engaged in “need-blind” admissions, accepting students without regard for their financial circumstances.

Attorneys for the former students say the universities maintained admissions policies that considered a student’s ability to pay when admitting them to certain programs. They claim that behavior violated the antitrust exemption, which expired in the fall of 2022.

The lawsuit also claims the group’s methodology placed too much emphasis on an applicant’s ability to pay in calculating the net price — what students pay after taking grants, scholarships and tax credits into account. The schools that adopted the approach artificially inflated the net price of attendance for financial aid recipients for years, according to the complaint.

Seven defendants, including Georgetown and Johns Hopkins, remain.

Plaintiff attorney Robert D. Gilbert said the 10 settlements “shine the spotlight on the seven remaining elite universities that have yet to do the right thing and rectify the overcharges to their alumni and students who came from working-class and middle-class backgrounds.”

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