Rice University is carving out a whopping $33.75 million to settle allegations that it was part of an elite group of higher education institutions involved in a price-fixing scandal. As the Houston Chronicle reports, the private Houston school, along with 16 other universities, stands accused in a class action lawsuit of colluding to manipulate financial aid, causing more than 170,000 students to overpay for their education.
This significant settlement sum, which was detailed in the university's latest financial statement, though not yet reflected in official court documents, comes on the heels of similar moves made by other top-tier institutions caught up in the same legal dragnet. The University of Chicago led the way with a $13.5 million settlement, Vanderbilt University reached "an agreement in principle" according to an Inside Higher Ed report, and Emory University, while declining to comment on specifics, also indicated a settlement in their accounts, according to the same Inside Higher Ed article.
The backdrop of this legal entanglement is the so-called '568 Presidents Group,' a collective based on need-blind admissions policies, enabling a collaboration on financial aid without running afoul of antitrust laws. However, the lawsuit claims that several group members did consider applicants’ financial situations, particularly favoring children of donors and the wealthy, contradicting their stated policies and leading to inflated costs for countless students.
Rice University, with an operating budget of $920 million and an endowment nearing $8 billion, has expanded its financial aid initiatives in recent years. Yet, it denies any wrongdoing in the case. "We believe it is without merit," a university statement from last year read. Rice officials assert pride in their financial aid practices and preparedness to "vigorously defend them in court." Chris Marsicano, an assistant professor at Davidson College, highlighted to the Houston Chronicle the pressures elite institutions face and why a settlement might be an appealing route despite the allegations, saying, "Avoiding the 'anti-elite, populist fervor' and any reputational damage from it might be worth a $33 million settlement."
With this wave of settlements, the universities involved seem to be sidestepping what could turn out to be a costly and drawn-out courtroom fight, not to mention the potential public relations fallout. So far, 13 other universities implicated in the suit have yet to announce similar reconciliations.
