Victims alleged a series of real estate seminars failed to deliver
Trump University - an organisation affiliated with US president-elect Donald Trump - is to pay US$25m (€23.5m) to settle a case.
New York State Attorney-General Eric T Schneiderman says his office sued Mr Trump for "swindling thousands of innocent Americans out of millions of dollars through a scheme known as Trump University".
"Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals to settle for even modest amounts of compensation for the victims of his phony university", Schneiderman adds.
He says the settlement is "a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university".
Three lawsuits - a lawsuit by New York state and two class actions suits in California - alleged a series of real estate seminars failed to deliver the education they promised.
Under the settlement, every victim is to receive restitution, while Mr Trump is to pay up to US$1m in penalties to the State of New York for violating state education laws.
Gonzalo Curiel, a federal district court judge who was hearing the two cases in California, was thrust into the limelight during the presdential campaign.
Mr Trump criticised the judge's decisions in the case, and questioned his impartiality because of his Mexican heritage.
He also tweeted back in February that he would not settle the case "out of principle":
Trump University has a 98% approval rating. I could have settled but won't out of principle!— Donald J. Trump (@realDonaldTrump) February 29, 2016