Caltech and Johns Hopkins University Reach Resolution in Financial Aid Litigation.
The California Institute of Technology and Johns Hopkins University have both reached preliminary agreements in the ongoing federal antitrust lawsuit that accuses a consortium of elite universities of conspiring to manipulate the financial aid amounts offered to students.
As per court documents, Caltech has consented to pay $16.75 million, while Johns Hopkins University has settled for $18.5 million. These settlements are subject to approval by the U.S. District Court for the Northern District of Illinois, where the lawsuit was initially filed. The class-action lawsuit was initiated in 2022 by several law firms representing a group of students who had previously attended some of the implicated universities.
In their motion seeking court approval for the two new settlements, the plaintiffs noted that the comparatively lower amounts for Caltech and Johns Hopkins were due to their shorter membership duration in the 568 Group compared to the other defendants. The plaintiffs in the lawsuit alleged that the universities participated in a price-fixing scheme by coordinating on the financial aid methodologies used to determine awards for prospective students.
Specifically, the lawsuit contended that the defendant universities “engaged in a price-fixing cartel aimed at diminishing or eliminating financial aid as a competitive factor, which has consequently led to an artificial inflation of the net cost of attendance for students receiving financial aid.”
If accurate, this would constitute a breach of the now-defunct Section 568 of the Improving America’s Schools Act of 1994, which stipulated that universities could collaborate in formulating their financial aid policies, provided they did not factor in the financial need of applicants during their individual admission processes.
The lawsuit was filed against 17 members of the so-called “568 Presidents Group,” which was established in 1998 and subsequently created a “Consensus Methodology” to assess a family's capacity to finance college education. The lawsuit claims that the group convened at least once a year to deliberate on financial aid calculations, leading to the defendants offering less financial assistance than would have been available under conditions of complete and equitable competition.
Following the initiation of the lawsuit, the 568 Presidents Group was disbanded in November 2022. The 17 universities named as defendants include:
Brown University, California Institute of Technology, University of Chicago, Columbia University, Cornell University, Dartmouth College, Duke University, Emory University, Georgetown University, Johns Hopkins University, Massachusetts Institute of Technology, Northwestern University, University of Notre Dame, University of Pennsylvania, Rice University, Vanderbilt University, and Yale University.
Out of the 17 institutions, twelve have reached settlements totaling nearly $320 million. In addition to the recent settlements announced this week, the following payments have been approved thus far:
- University of Chicago:$13.5 million
- Emory University: $18.5 million
- Yale University: $18.5 million
- Brown University: $19.5 million
- Columbia University: $24 million
- Duke University: $24 million
- Dartmouth College: $33.75 million
- Rice University: $33.75 million
- Northwestern University: $43.5 million
- Vanderbilt University: $55 million
The five institutions that continue to contest the lawsuit are Cornell University, Georgetown University, Massachusetts Institute of Technology, University of Notre Dame, and University of Pennsylvania.
