Trump from having to testify in a trial in San Diego that was set to begin on November 28.
The settlement ended a suit brought by New York Attorney-General Eric Schneiderman, as well as two class action suits in California.
About 6,000 former students are covered by the settlement.
The victims’ attorney, Jason Forge said at a court hearing that the plaintiffs would receive at least half of their money back.
“About $21 million will go to settle the class-action suits and $4 million will cover the victims of the suit brought by Schneiderman,” Forge said.
According to him, the attorneys waived all fees.
“We are pleased to announce the complete resolution of all litigation involving Trump University,” a Trump Organisation spokesperson said.
“While we have no doubt that Trump University would have prevailed at trial based on the merits of this case, resolution of these matters allows President-Elect Trump to devote his full attention to the important issues facing our great nation,” the spokesperson added.
Trump did not acknowledge any liability in the settlement.
Trump University is the defunct, for-profit real estate seminar business Trump created in 2005.
It promised to teach students investing techniques they could use to get rich on real estate, just like Trump.
It advertised that instructors were hand-picked by the president-elect himself, but former students claimed that was not true.
Trump had suggested under oath that he was not very involved in hiring instructors, despite what the promotional materials suggested.
Some students ended up paying tens of thousands of dollars.
While the initial Trump University seminar was free, teachers would then lure them for another programme.
A “One year apprenticeship” which was effectively a three-day seminar, cost $1,495, according to court documents.
“Mentorship” costs at least $10,000 and the most expensive, the “Gold Elite programme”, cost $35,000.
The settlement is a complete turnaround from Trump’s earlier position on the lawsuits.
“This is a case I could have settled very easily, but I don’t settle cases very easily when I’m right,” Trump had said in March.
But since he was elected, U.S. District JudgeGonzalo Curiel urged the parties to settle the case to avoid the immense complications of a president-elect facing trial while preparing to take office.
Last week, one of Trump’s attorneys indicated that he might change his position on settling.
Schneiderman said on Friday that he was pleased with the terms of the settlement.
New York Attorney-General first filed the suit in 2013.
“The victims of Trump University have waited years for today’s result. However, I am pleased that their patience and persistence will be rewarded by this $25 million settlement,” Schneiderman said in a statement.