diff --git a/dockerfiles/r-stat-301/Dockerfile b/dockerfiles/r-stat-301/Dockerfile
index eeddbf9..927a37e 100644
--- a/dockerfiles/r-stat-301/Dockerfile
+++ b/dockerfiles/r-stat-301/Dockerfile
@@ -39,7 +39,8 @@ RUN mamba update --quiet --file /tmp/conda-linux-64.lock && \
   Rscript -e "lib <- 'moderndive'; install.packages(lib, repos='http://cran.us.r-project.org'); if ( ! library(lib,character.only=TRUE,logical.return=TRUE)){quit(status=1,save='no')}"
 
 # Install latest pexpect to fix asyncio issue with jupyterlab_git
-RUN pip install --no-cache pexpect==4.9.0
+# Install setuptools==69.0.0 to fix issue with nbgrader and "from backports import tarfile"
+RUN pip install --no-cache pexpect==4.9.0 setuptools==69.0.0
 
 # Disable the cell toolbar (which ignores metadata and students often accidentally click + delete grading cells)
 RUN jupyter labextension disable @jupyterlab/cell-toolbar-extension