A federal appeals court on Monday agreed to hear a challenge from Cornell University and several other elite U.S. colleges regarding a judge's order that allowed a financial aid lawsuit to proceed as a class action. The Chicago-based 7th U.S. Circuit Court of Appeals granted the schools' request to immediately appeal a June decision that permitted students to sue collectively rather than individually.
The lawsuit, originally filed in 2022, alleges that 17 top-tier universities colluded to suppress competition for student financial aid and favored wealthy applicants during the admissions process. While 12 of the universities, including Brown, Yale, and Columbia, have already reached settlements totaling nearly $320 million, the remaining defendants continue to deny the allegations of wrongdoing.
In the appeal, lawyers for the universities argued that U.S. District Judge Matthew Kennelly relied on "flawed work" from an expert witness when he certified the class in June. The appeals court stated its review will be limited strictly to determining whether the district court properly analyzed expert testimony concerning the "common proof of antitrust impact" required for a class action.
For the universities involved, including Cornell, Georgetown, and the University of Pennsylvania, the financial stakes are substantial. A $2 billion judgment would represent a significant expenditure from university funds or endowments. Conversely, if the appeals court reverses the class certification, the 220,000 students would lose their ability to sue as a single group, which often makes it more difficult for individuals to pursue complex legal claims against large institutions due to the high cost of litigation.
The case also sets a precedent for how elite institutions coordinate their financial aid policies. While 12 schools have already paid settlements to resolve their roles in the case, a final ruling will clarify the legal boundaries of how universities can cooperate on aid formulas. A trial had been scheduled to begin in November, but that timeline is now subject to the appeals court's review. No specific date for the 7th Circuit's decision has been reported.