Vanderbilt Settles in ‘568 Cartel’ Lawsuit

Seeking to avoid having its admissions secrets involving donor preferences exposed, Vanderbilt settles in the price-fixing antitrust case.
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Published on November 15, 2023
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  • Vanderbilt University has agreed to settle claims in the “568 Cartel” case.
  • This class-action suit involves 17 elite private universities accused of price-fixing and failing to practice need-blind admissions.
  • Terms of the settlement have yet to be officially submitted to the court.
  • All individuals involved in the claim, not just Vanderbilt alumni and students, could benefit financially.

Vanderbilt University has become the second institution to settle claims in an antitrust suit alleging price-fixing among 17 elite universities.

Earlier this year, the University of Chicago agreed to pay $13.5 million to settle the case.

Details of Vanderbilt's settlement have not been released. In a court document filed Nov. 3, Vanderbilt agreed to provide a long-form settlement agreement.

Though we believe the plaintiffs' claims are without merit, we have reached a settlement in the best interest of our continuing focus on providing talented scholars from all social, cultural, and economic backgrounds one of the world's best undergraduate educations and the opportunity to graduate debt-free, Vanderbilt said in a statement.

'568 Cartel' Universities Accused of Price-Fixing, Favoring Donors

The class-action suit — Henry et. al. vs. Brown University et. al., filed in 2022 — claims 17 elite private colleges are in violation of the Sherman Antitrust Act because they failed to uphold a commitment to need-blind admissions as required by Section 568 of the Improving America's Schools Act of 1994.

This congressional sanction, which expired in September 2022, allowed colleges to formulate common approaches to awarding need-based financial aid — as long as they strictly adhered to need-blind admissions.

In addition to Vanderbilt and UChicago, the case involves six Ivy League schools and other highly selective institutions such as Northwestern University, the California Institute of Technology, the Massachusetts Institute of Technology, and Johns Hopkins University.

The claim contends these universities conspired to artificially reduce financial aid awards and increase the net cost of attendance through the use of a consensus methodology for determining aid. Since 2004, more than 200,000 students have paid higher tuition and incurred larger debt absent competition among these institutions, the suit alleges.

How did these colleges stray from their need-blind commitment? By favoring wealthy families in some admissions decisions, claims the lawsuit. They considered the financial need of students on the waitlist, engaged in enrollment management practices to secure full-pay students, and wooed kids of donors or potential donors.

In the suit, former Duke President Richard Brodhead is quoted as saying, It would be naïve to say that any university should pay no attention to a family's ability to help the university. Likewise, then-Vanderbilt President E. Gordon Gee noted that donor connections make a difference in admissions.

At a July hearing in this case, an attorney representing Dartmouth College admitted the institution has considered donations when making admissions decisions.

Lawyers for the plaintiffs acknowledged such preferences in an Oct. 31 filing, claiming that Vanderbilt was eager to admit the children of its wealthiest donors, even if some were not up to Vanderbilt's exacting standards.

The Nov. 3 document notes that plaintiffs had moved the Court to compel Vanderbilt ... to send FERPA (Family Educational Rights and Privacy Act) notices to specific individuals, suggesting the university's admissions secrets were about to be laid bare.

Attorneys representing the university argued the plaintiffs were seeking admissions data to parade names before a jury — not because they need it to prove their claims.

Settlement Could Benefit All Affected Students

Any monetary settlement by Vanderbilt could benefit all plaintiffs in this case, not just those who attended the Nashville university.

As the UChicago decision made clear, alumni and students involved in the suit will be notified of the financial ramifications of any settlements.

In the meantime, the case proceeds for the remaining 15 defendants, who might similarly opt to settle given the sensitive and revealing nature of the documents being shared, witnesses being questioned, and admissions practices being exposed.