Higher education is unfortunately a luxury most cannot afford due to high fees. A recent class action lawsuit, however, might set off a domino effect that will lead to long-term, sustainable change in the education landscape.
Hundreds of millions to be paid out by U.S. colleges amidst class action lawsuit
A lawsuit with a settlement of a whopping $320 million will be paid out to eligible individuals by some of the top colleges around the United States. The lawsuit was taken to court after these schools were accused of allegedly unfairly limiting financial aid to students.
It appears that seventeen universities that are regarded as elite, are facing allegations of violating antitrust laws by coordinating to restrict financial aid, effectively inflating costs for students. Theses colleges have agreed to make the payout of $320 million as part of an agreement to resolve these claims whilst still maintaining innocence.
Over 200,000 former students were potentially impacted meaning that the implications of this case is quite severe. This case serves as yet another reminder of the longstanding restrictions and concerns regarding fairness in higher education. Included in the list of schools facing these allegations is Johns Hopkins University and Massachusetts Institute of Technology.
According to a report by Education Data Initiative, tuition and fees at private institutions have risen over 140 percent over the last 20 years.
Let’s talk details
It is alleged that these colleges were engaging in price fixing practices by sharing information about financial aid policies. This allegedly allowed them to limit competition and keep financial aid packages lower than they might have been in a genuinely competitive market — this is the focal point of the lawsuit.
The plaintiffs argued that low- and middle-income students who rely heavily on financial aid to afford higher education were disproportionately impacted by this collaboration that blatantly disregarded federal antitrust laws.
An initial settlement of $284 million was reached with 10 of the 17 implicated schools. A combined total of $35.3 million is the amount that was recently settled on by Caltech and Johns Hopkins University. This brings the grand total up to $320,250,000. This massive payout is still pending approval from U.S. District Judge Matthew Kennelly, however.
Universities that are settling
- Vanderbilt University – $55,000,000
- Northwestern University – $43,500,000
- Dartmouth College – $33,750,000
- Rice University – $33,750,000
- Columbia University – $24,000,000
- Duke University – $24,000,000
- Brown University – $19,500,000
- Emory University – $18,500,000
- Johns Hopkins University – $18,500,000
- Yale University – $18,500,000
- California Institute of Technology – $16,750,000
- University of Chicago – $13,500,000
Are you eligible for a payout?
As per the official settlement website, students eligible for payments include students who attended one or more of the involved universities as full-time undergraduates during the specified period, received need-based financial aid and had remaining costs (tuition, fees, room or board) not fully covered by financial or merit aid (excluding loans).
Students who attended during the following periods are eligible:
- Chicago, Columbia, Cornell, Duke, Georgetown, MIT, Northwestern, Notre Dame, Rice, Vanderbilt and Yale students: From Fall Term 2003 until the court issues an official preliminary approval of the settlement agreement.
- Brown, Dartmouth and Emory students: From Fall Term 2004 until the court issues an official preliminary approval of the settlement agreement.
- Caltech students: From Fall Term 2019 until the court issues an official preliminary approval of the settlement agreement.
- Johns Hopkins students: From Fall Term 2021 until the court issues an official preliminary approval of the settlement agreement.
It is estimated that if around half of the 200,000 eligible class members file timely claims, each claimant could receive an average of approximately $2,000.
Alex Beene, financial literacy instructor for the University of Tennessee at Martin has shared that “the hope is settlements like this will ultimately lead universities to apply better transparency standards to the financial aid process. While there are certainly some institutions that are already doing a better job of this, it has a long way to go.”
Parallel to these settlements, Massachusetts Institute of Technology (MIT), Cornell University, University of Pennsylvania, Georgetown University and the University of Notre Dame have opted to continue fighting the lawsuit.