Lawyers for the President-elect reached the out-of-court deal to avoid a trial in a potentially embarrassing case that, during his campaign, he had promised to keep fighting and never settle.
Jury selection for one of the three cases had been due to begin in just over a week.
Those alleging they had been wronged accused the university - which claimed to be for real estate investors - of defrauding students.
Anyone who enrolled paid up to $35,000 a year to take part in programmes that promised to reveal Mr Trump's business secrets.
About 6,000 students who say they lost out as a result of signing up, and who later joined two class action suits in San Diego, California, will share $21m if a federal judge approves the settlement.
A further $4m will be paid to settle a complaint filed by New York Attorney General Eric Schneiderman in 2013.
Under the terms of the settlements, Mr Trump does not admit any wrongdoing.
The lawsuits alleged that the nationwide seminars provided by Trump University were like informercials, pressuring people into spending more but, ultimately, failing to deliver on their promises.
The San Diego trial was scheduled to last several weeks and threatened to dominate the headlines as the President-elect continues to fill cabinet posts.
It comes as the US Senate's top Democrat says he is "very concerned" about Mr Trump's choice of Jeff Sessions for attorney general, after he also selected retired general Mike Flynn as national security adviser and Kansas representative Mike Pompeo as CIA director.
During the campaign, Mr Trump brought attention to the suit by attacking the judge overseeing the San Diego cases, Gonzalo Curiel, by claiming his Mexican heritage made him biased.
Jason Forge, a lawyer for the students who brought the action, said the thousands of former students covered by the San Diego lawsuits should be able to receive at least half and possibly all their money back - as much as $35,000.
The President-elect denied the allegations and vowed during the campaign to continue to fight any case against him.
In May, he told supporters at a rally that he would travel to San Diego to testify once he had won the presidency.
Mr Trump said at the time: "I could have settled this case numerous times but I don't want to settle cases when we're right. I don't believe in it.
"And when you start settling cases, you know what happens? Everybody sues you because you get known as a settler. One thing about me, I am not known as a settler."
Lawyers for those bringing the action said moves to settle happened quickly after Mr Trump won his surprise victory in the 8 November election.
Mr Schneiderman said Mr Trump fought him "every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes."
Mr Forge said: "We were at each other's throat for six and a half years and were able to find the common ground with them and do something good there."
An ethics expert who is one of a group who has called on Mr Trump to make a clean break from his business dealings said the settlement may backfire if lawyers think the President-elect is eager to settle to avoid court cases.
Richard Painter said: "Plaintiffs' lawyers are going to smell blood in the water."
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