Tens of thousands of former Penn State students could be in line to receive a portion of a historic class-action settlement that was submitted Tuesday for a federal judge’s approval.
About 72,000 former Penn State students would receive a share of $17 million if the proposal is greenlighted by U.S. District Judge Robert J. Colville. The settlement would be the largest of its kind, both in value and the amount of students covered by the agreement. Those eligible could expect to receive about $155 before taxes and other costs.
“We are very pleased with the settlement we have reached with Penn State, on behalf of the students who, in Spring 2020, lost out on their full semester experience of campus activities and in-person instruction,” attorney Gary Lynch wrote in a statement Wednesday. “We recognize that the Covid pandemic was beyond Penn State’s control, but our position in this case and others like it has been that the students, who are mostly very young adults, should not bear the entire financial loss associated with the pandemic. This settlement helps the students recover some of their financial losses.”
The COVID-era lawsuit brought by students and parents sought refunds of tuition and fees they paid during the spring 2020 semester after the university closed its campuses and transitioned to online classes because of the coronavirus pandemic.
Attorneys alleged Penn State charged students for an in-person education and on-campus services, but failed to deliver when it closed its campuses. The university did not admit any wrongdoing in the proposed settlement.
In an August 2020 court filing, Lynch wrote that students paid for a first-rate education and on-campus experience but were instead provided a “materially deficient and insufficient alternative” that amounted to a breach of a contract.
Instead, Penn State said it acted properly and swiftly to protect the health and well-being of students, faculty and staff in the face of the novel disease.
“The University did its best to respond to unexpected and extraordinary emerging circumstances and denies the allegations contained in plaintiffs’ complaint and any allegations of wrongdoing,” the university wrote in a statement Wednesday. “However, both Penn State’s and its students’ interests are best served by the prompt resolution of this matter. Therefore, the University has entered into the Settlement Agreement to avoid further expense, burden and risks associated with continuing litigation.”
In the statement, the university also said it gave room and board rebates, facilitated the distribution of more than $131 million in funding from the coronavirus relief bill and established an emergency fund to provide additional aid to students in need.
Penn State also touted its investments in technology and digital resources that it said were needed to make critical online tools available.
“Faculty immediately pivoted to remote instruction and staff transitioned to offering students the full suite of resources necessary to successfully complete their academic year, including access to research materials, career services support, health services and enhanced mental health counseling, and student advisory services,” the university said.
“In addition, when needed, staff facilitated student access to social service providers. This seamless transition ensured that students could safely continue learning in the face of the COVID crisis, where in-person classes were not permitted under Pennsylvania’s stay-at-home orders and closure mandates at the time.”
The proposed agreement covers a sweeping amount of Nittany Lion alumni, including those who attended University Park or any commonwealth campus.
Eligible recipients include all Penn State students enrolled during the spring 2020 semester who paid tuition and/or fees and were registered for at least one in-person class at the beginning of the semester. No action would be needed to receive a slice of the deal.
Payments would be sent automatically to eligible members’ last known permanent postal address on file with Penn State. Members would also have the option to update their address online or elect to receive the payment via Venmo or PayPal.
Attorneys stand to receive no more than one-third of the settlement, meaning former students could expect about $155 before taxes and other costs. Eligible members can also object or opt out of the settlement, if approved.
Should the judge grant preliminary approval of the settlement — it’s not known when that may happen — Penn State would be required to pay $17 million into an escrow account within 20 business days.
If the proposal gains final approval, payments would be sent within 60 days. Those who may receive a check would have 180 days to cash it, otherwise the uncashed checks would be redistributed or designated to a scholarship fund for Penn State students.
No hearings are scheduled as of Wednesday afternoon.
There were about 300 such lawsuits as of August 2023, according to Times Higher Education, which USA Today described as a British publication that partners with The Wall Street Journal on rankings and evaluations of U.S. schools.
