Higher Education And 403(b) Plan Litigation

What insights have we gained after a decade of heightened scrutiny?

Nearly a decade has passed since universities first became the target of defined contribution (DC) fee litigation, which had previously focused on 401(k) plans sponsored by for-profit organizations. Since 2015, more than 20 cases have been filed against universities. Many of these cases have been settled, with payouts totaling nearly $140 million to date. One case went to trial, resulting in a favorable verdict for the university. Another reached the Supreme Court and remains in litigation, with a second case scheduled for argument in 2025. As of November 2024, nine cases are still pending.

By now, the claims have become familiar. Generally, the lawsuits allege that the universities offered too many investment options, failed to replace expensive and underperforming investments and charged above-market fees for investments and recordkeeping services. Some cases have argued that plans with