The University of Chicago has agreed to pay $13.5 million to settle claims it colluded with other elite colleges and universities to limit financial aid awards.
The “icebreaker” settlement would be the first in a wide-reaching class action that dates to January 2022 when 10 named plaintiffs sued 17 private universities under the Sherman Antitrust Act. The other 16 defendants are colleges and universities Brown, Emory, Johns Hopkins, Yale, California Institute of Technology, Columbia, Cornell, Dartmouth College, Duke, Georgetown, Massachusetts Institute of Technology, Northwestern, Notre Dame, Penn, Rice and Vanderbilt.
Representing the plaintiffs and the proposed class are attorneys from the firms of Gilbert Litigators & Counselors, of New York; Freedman Norman Friedland, also of New York; and Berger Montague, with offices in Philadelphia, Chicago and Washington, D.C.
The firms filed a motion Aug. 14 in Chicago asking U.S. District Judge Matthew Kennelly to move forward on provisional certification of the settlement class and preliminary approval of the proposed partial settlement. They plan to seek attorneys fees of up to one third, or $4.5 million, of the settlement pool, plus reimbursement of litigation and investigation expenses.
The allegations center on institutional membership in the 568 Group, a university consortium that developed common standards for determining the ability to pay for colleges known as the Consensus Methodology. The alleged benefit for the schools was reducing fighting over attracting incoming students, but the result was those students paying more than they otherwise would have had the universities crafted distinct financial aid packages.
According to the settlement motion, the plaintiffs expect to obtain “certain additional information” from the school to further understanding of the 568 Group. They also noted University of Chicago “appears to have stopped participating in the alleged cartel about eight years before the case was filed, and to have done so because the cartel was limiting its ability to compete on price.”
UC said it withdrew from the collective in 2014, which the plaintiffs said provide it “some colorable defenses that most other defendants” lack. All the schools failed to persuade Kennelly to grant a motion to dismiss in August 2022, and the University of Chicago began settlement negotiations without the codefendants in April 2023.
The settlement allocation plan calls for prorated payments to class members based on the number of semesters each was enrolled. Because the plaintiffs alleged the universities tried to affect net prices — tuition, fees, room and board, minus need-based aid and scholarships — “it is reasonable to conclude that claimants suffered injury in rough proportion to the average net price charged by each school during the years claimants attended. In other words, because the alleged overcharge is, roughly, a fixed percentage amount of the net price paid, a reasonable measure of the injury to each claimant is the average net price each defendant university charged during each year or term that claimant attended.”
There now are eight class representatives, each of whom would be in line for a $5,000 service award. Proving class membership requires evidence of enrollment in at least one full-time undergraduate program from 2003 through whenever preliminary approval is granted as well as showing receipt of need-based financial aid.
The University of Chicago has been represented by attorney James L. Cooper and others from the firm of Arnold & Porter Kaye Scholer LLP, of Washington, D.C., New York and Chicago.