The High Court had heard the institute had been forced to cancel the only audiology undergraduate course in Ireland because the Higher Education Authority refused to fund it.
This, the college claimed, was because the HSE would not guarantee the students with clinical placements.
Two students, Megan Munnelly, of Knockbrack, Corballa, Co Sligo, and Diarmuid O’Connor, of Ballyvodock, East Midleton, Co Cork, sued AIT, the Higher Education Authority and the HSE and asked the High Court to quash the institute’s decision.
Mr Justice Gerard Hogan was told yesterday that the case had been settled.
Feichin McDonagh, counsel for AIT, said the students would be able to resume their studies in audiology in early September.
Paul Anthony McDermott, counsel for the HSE, said it was in a position to offer a number of clinical placements for the students when they entered their third year. He said the offer was being made on a once-off basis only to this particular group of students.
Gary Compton told the court the HEA was happy to provide funding.
Mark Harty, counsel for the students, said his clients, their classmates and their families, were delighted with the outcome.