Rice University bankrolls $33M for financial-aid lawsuit resolution.

January 21, 2024
1 min read

Rice University has set aside $33.75 million to settle an antitrust lawsuit filed against 17 prestigious private universities across the country accused of illegally running a scheme that limited the amount of financial aid given to students, according to the school’s financial statements for last year. The Houston-based university’s financial statement for last fiscal year, first reported by the Houston Chronicle, says the school will use the money to settle “a class action lawsuit in which it had been named a co-defendant along with sixteen other universities.” Court records related to the case reviewed Friday do not show a settlement agreement has been reached yet.

Nine former students who attended some of the universities filed a lawsuit in January 2022 claiming that the school’s financial aid and admission practices inflated the price of attendance. As a result, more than 200,000 students receiving financial aid were overcharged hundreds of millions of dollars, according to court documents. The U.S. The Justice Department has backed the lawsuit.

For nearly two decades, the universities banded together to design formulas on how to award financial aid. That behavior is usually prohibited under federal antitrust laws, which are partly meant to prevent competitors from joining to fix prices. The schools were allowed to work together by a federal law that protects universities with so-called “need-blind” policies – essentially stating that the universities will disregard an applicant’s financial status when making admissions decisions – from antitrust laws. The group called itself the 568 Presidents Group after the federal law that allowed them to collaborate. The group dissolved in November 2022 after the lawsuit accused half of the group of violating their need-blind policies.

Rice was one of seven defendants who “may or may not have” considered applicants’ financial need, the lawsuit claims, but should have known the other universities involved weren’t abiding by the rules because of their work together. Some of the universities have already settled. University of Chicago was the first in August with a $13.2 million settlement. Emory University followed soon after in September, settling for an undisclosed amount. Vanderbilt University also agreed to settle. Rice said it will use about 6% of its nonoperating revenue in 2023 to settle.

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