Judge Approves Payouts in College Financial Aid Antitrust Settlements

According to Bloomberg Law, US District Judge Matthew F. Kennelly approved the plan to distribute settlement proceeds from agreements reached with 10 universities, allowing payments to eligible class members to begin in the coming weeks. The judge’s July 2 order also encouraged recipients to promptly cash their settlement checks, which are expected to average approximately $2,500.

The litigation centers on allegations that elite private universities unlawfully coordinated the methodology used to calculate students’ financial aid awards, reducing competition for applicants seeking financial assistance. The plaintiffs argued that the schools violated federal antitrust law by participating in a common framework for determining financial need while claiming eligibility for an exemption available to institutions that admit students on a need-blind basis.

The universities have denied wrongdoing, but a number of institutions chose to settle rather than continue litigating the claims.

The settlements approved for distribution involve 10 institutions, including Yale University and Brown University, Bloomberg Law reported. The combined agreements represent hundreds of millions of dollars in recoveries for former undergraduate students who qualified for financial aid during the relevant period.

Read more: Judge Certifies Class of Students in Financial Aid Antitrust Lawsuit Against Elite Universities

The lawsuit was originally filed in 2022 against 17 private universities. Plaintiffs alleged that the institutions coordinated financial aid formulas through the so-called “568 Presidents Group,” a consortium named after Section 568 of the Improving America’s Schools Act. That provision permits certain colleges to collaborate on financial aid methodologies if they admit students without considering applicants’ financial circumstances.

According to court filings, the plaintiffs contended several participating schools were not fully need-blind because they considered applicants’ ability to pay in certain admissions categories, making the statutory exemption unavailable and rendering the alleged coordination unlawful under Section 1 of the Sherman Act.

The case has drawn attention from antitrust practitioners because it applies traditional competition law principles to higher education, an industry that has increasingly faced scrutiny over collaborative practices affecting tuition, admissions, and financial aid.

Several universities resolved the claims through negotiated settlements while continuing to deny liability. Earlier agreements included settlements with institutions such as the University of Chicago, while additional settlements were later reached with Johns Hopkins University and the California Institute of Technology, among others.

Source: Bloomberg Law