George Washington University yesterday agreed to pay $357,000 in an out-of-court settlement to seven students injured two years ago in an early morning fire that swept through the fifth floor of a campus dormitory.

One of the students, William Simms, 24, of Cleveland, suffered multiple internal injuries and a fractured jaw when he leaped from a fifth-floor window to escape the blaze, which caused $60,000 in damage to Thurston Hall, a converted hotel that housed 880 students then.

Also sharing in the settlement, according to the students' attorney, Wayne M. Mansulla, are James Soos, 22, of Eatontown, N.J.; Robert Malkoff, 23, of Arlington; Anne Drake, 23, of Alexandria; Judith Czajkowski, 21, of Trumbull, Conn.; Cathy Amkraut, 21, of Port Chester, N.Y.; and Suzin Farber of Chicago.

University officials declined to comment on the settlement, which was approved yesterday by D.C. Superior Court Judge Sylvia Bacon.

The fire, which broke out at 3:45 the morning of April 19, 1979, sent students streaming for exits, trapped dozens of others in smoke-filled rooms and forced two students to leap five floors onto a gravel courtyard below. A total of 34 students were injured in the fire. Most of them were treated for smoke inhalation. The blaze was said by fire officials to have started in a burning mattress.

In their lawsuit, each of the seven students sought $1 million in damages. The suit alleged that the building's alarm and security systems were inadequate, that the building lacked a sprinkler system, that residents were not properly trained in fire safety and that certain materials used to construct the dormitory had contributed to the fire.