Johns Hopkins and Caltech Settle for $35.3M in College Price-Fixing Lawsuit

Johns Hopkins University and the California Institute of Technology (Caltech) have agreed to pay a combined $35.3 million to resolve allegations of their involvement in a price-fixing scheme among several prestigious universities, according to court filings submitted on Friday. The settlements are part of an ongoing class-action lawsuit accusing 17 prominent institutions of violating antitrust laws and artificially inflating the cost of college through unlawful collaboration on financial aid practices.

Johns Hopkins will contribute $18.5 million to the settlement fund, while Caltech’s portion amounts to nearly $16.8 million. Both institutions denied any wrongdoing in their respective settlements, which are subject to judicial approval.

The lawsuit centers around the 568 Presidents Group, a now-dissolved consortium of colleges and universities that collaborated on financial aid policies. According to the lawsuit, the group’s actions breached federal antitrust law by allegedly prioritizing the financial capabilities of certain applicants—such as those with ties to donors or those transferring from other institutions—over need-blind admissions standards.

A federal statute previously permitted universities to work together on financial aid formulas, provided they adhered to need-blind admissions policies, meaning applicants’ ability to pay would not be considered in admissions decisions. However, the lawsuit claims that the 568 Presidents Group’s practices disqualified its members from this exemption.

Related: Court Denies Dismissal in Crab Price-Fixing Lawsuit

Johns Hopkins and Caltech had relatively short memberships in the consortium. Johns Hopkins joined just two months before the lawsuit was filed in 2022, while Caltech’s participation spanned two years.

The institutions had initially sought to dismiss the case, asserting their admissions processes complied with need-blind requirements. However, the U.S. Department of Justice contested some of their defenses, and a federal judge allowed the lawsuit to proceed.

This latest settlement follows a $13.5 million agreement by the University of Chicago in August 2023, marking the first settlement in the case. Since then, 10 additional institutions have settled, bringing the total settlement pool to $284 million before Friday’s agreements.

The firm overseeing the settlements has received more than 68,000 claims deemed valid, indicating the widespread impact of the alleged financial practices. According to statements within the filings, the settlements aim to address claims that these practices contributed to higher college costs for students.

Source: Higher ED Dive