The California Institute of Technology has agreed to settle a class-action lawsuit that accused it of misleading students who signed up for a “boot camp” that carried Caltech’s name but in practice had scant ties to the school, one of the world’s richest universities.

The settlement called for Caltech and an outside partner, Simplilearn, to change how they advertised the boot camp, adding new restrictions that threatened the program’s allure. But on Monday, the day a court released documents that detailed the settlement’s terms, Caltech said in an open letter it would cut ties with Simplilearn later this year.

Nevertheless, the settlement, which still requires a judge’s approval, may influence how other schools market similar offerings.

Caltech is among hundreds of universities across the country, many of them looking for new sources of revenue, that have licensed their names to promote courses that were actually run by outside companies, with the university often playing only limited roles in hiring, instruction or curriculum development.

Some universities earn several thousand dollars for each student who enrolls in a branded program; researchers estimate that those fees add up to hundreds of millions of dollars a year across the higher education industry.

The court challenge against Caltech and Simplilearn, an online program management company, was built around California’s consumer protection laws. Filed in July 2023, the case accused the school of deceiving students into enrolling in a boot camp that it said was “a Caltech program in name only.”

Program advertisements and materials said the boot camp was “powered by Simplilearn.” Some students, though, took that language to be a reference to a technology platform and were surprised to find, after they enrolled, that their instructors were Simplilearn representatives rather than Caltech professors.

The named plaintiff in the California case, Elva Lopez, said in the lawsuit that one of her instructors was a recent graduate of the same program, and not one of Caltech’s faculty members.

After a Superior Court judge in San Francisco ruled in April 2024 that much of the case could proceed, Caltech and Simplilearn said they were open to settlement talks.

The settlement’s financial terms — in addition to legal fees, Simplilearn has agreed to pay $340,000 and Caltech $60,000 — are not enormous, particularly for an institution like Caltech, which has reported at least $3 billion a year in revenue for seven consecutive years. The settlement, however, threatened years of severe restrictions on how Caltech and Simplilearn could promote the boot camp.

For example, Caltech and Simplilearn agreed that they would “not represent that boot camp students have access to Caltech services that they do not have access to.” They pledged to publish “an accurate and prominent description” of each of their roles, and to “include a directory page listing all current boot camp instructors and their affiliation.” Simplilearn recruiters would have to use email addresses with the company’s domain name, not ones suggesting employment by Caltech.

And if Simplilearn were to handle matters like career counseling, related websites would “state that those functions are performed by Simplilearn.”

The agreement, signed last week but not released until Monday, also called for Caltech to play a significant role in any future iterations of the boot camp, including approving the curriculum and instructors. And — in a seeming nod to Lopez’s claim about her instructor’s credentials — Caltech and Simplilearn agreed not to “hire or use boot camp instructors whose only credentials for teaching cybersecurity are that they have graduated from a cybersecurity boot camp.”

Neither Caltech nor Simplilearn admitted wrongdoing in connection with the settlement; in the settlement agreement itself, they said they “deny” breaking any laws. Simplilearn did not immediately comment Monday, and Caltech did not discuss the settlement itself in its open letter.

The class-action suit concerned only Caltech’s cybersecurity boot camp, and it covered only California residents who enrolled in the program over a certain time period. In a court filing, Simplilearn’s president said the company believed 263 people, who had collectively paid more than $2.4 million in tuition, were affected. On average, students are expected to receive roughly $1,465 each, or about 16% of their tuition costs.

Eric Rothschild, the litigation director of the National Student Legal Defense Network, which represented Lopez, said in an interview Monday that he felt the settlement was “a good result” for students and that the guardrails it mapped out could be replicated elsewhere.

“Schools in any state should aspire to the kind of increased transparency that we have here, both to avoid litigation and because it’s the right thing to do for the students,” he said.

In September, The New York Times published an article about shortcomings in another Caltech boot camp.

Students in that article described inconsistent instruction and a program that they said fell short of the high standards they associated with Caltech. One student in a cloud computing boot camp, Raymond Sewer, said Caltech and Simplilearn “threw icing on a cornbread muffin and called it a cupcake.”

Caltech told the Times in September that the experiences of students like Sewer were “really isolated events” that were not “reflective of the quality of the program.” Caltech said it had recently developed quality control measures to “ensure that our expectations for instruction and the student experience are met.”

Hours after the Times published its article, Caltech’s president and provost announced that the school was “evaluating” its relationship with Simplilearn. In a message to the Caltech community Monday, they said that the university’s Center for Technology and Management Education would end its relationship with Simplilearn on Nov. 30, “once all existing course commitments have been completed.”

The center, the Caltech leaders said, “will honor commitments to students currently enrolled in online boot camp programs conducted in partnership with Simplilearn, but will not launch or host any new courses with Simplilearn.”

A Caltech spokesperson said the school had no other connections to the company.

The Biden administration faced pressure to rescind Obama-era federal guidance that helped enable outsourced programs like Caltech’s. In the waning days of Joe Biden’s presidency, the Department of Education issued a sternly worded eight-page letter to colleges and universities, warning that misrepresentations to prospective students could lead to severe penalties.

But regulators stopped short of pulling back the overarching guidance before President Donald Trump took office. Trump left the Obama-era guidance in place during his first term.