Northwestern University has settled a class-action lawsuit alleging the school and 17 other universities violated antitrust laws and illegally collaborated in a price-fixing scheme to limit students’ financial aid.
On Friday, Northwestern agreed to pay $43.5 million to settle the claim that it drove up the cost of attendance for students on financial aid.
In a statement to the Tribune, Northwestern University spokesperson Jon Yates said the university agreed to settle the case without admitting liability so it could put the matter behind them and “focus on Northwestern’s global eminence, excellent teaching, innovative research, and the personal and intellectual growth of our students.”
“We maintain the University did not commit any wrongdoing and that the plaintiffs’ claims are baseless,” Yates said.
According to court documents filed in January 2022, students who filed the lawsuit said Northwestern and the University of Chicago, Columbia University, Yale University, Dartmouth College, Georgetown University, and Brown University, among others, colluded on the amount of financial aid awarded to students and favored applicants from wealthier families.
The lawsuit argues that the elite institutions have “participated in a price-fixing cartel that is designed to reduce or eliminate financial aid as a locus of competition, and that in fact has artificially inflated the net price of attendance for students receiving financial aid.”
According to the lawsuit, the 17 universities failed to follow need-blind admission, which means admissions officers cannot consider income or a student’s ability to pay tuition when considering whether to accept them.
United States antitrust laws allow higher education institutions to work together to come up with financial aid awards for applicants, but applying for financial aid is not supposed to have any impact on the university’s admissions decision, according to the 568 Exemption, a section of the Improving America’s Schools Act of 1994.
“Under a true need-blind admissions system, all students would be admitted without regard to the financial circumstances of the student or student’s family,” the lawsuit states. “Far from following this practice, at least nine Defendants for many years have favored wealthy applicants in the admissions process. These nine defendants have thus made admissions decisions with regard to the financial circumstances of students and their families, thereby disfavoring students who need financial aid.”
In addition to Northwestern, Rice, Dartmouth and Vanderbilt also agreed Friday to settle for a total payout of $166 million to settle the claims after Columbia, Yale, Duke, Brown and Emory agreed to pay a combined total of $104.5 million to settle their portions last month.
UChicago was the first school to settle in the case for $13.5 million last August.
Yates added that Northwestern is committed to removing financial barriers for its students and families.
“Northwestern prioritizes funding financial aid so we can welcome the most talented students regardless of their ability to pay,” Yates said. “More than 60% of undergraduates receive financial aid, which amounted to almost $290 million last academic year.”
