Leading Separate Lives

1993 was the year that MIT received what may have been its oddest holiday present ever--a December settlement with the Justice Department which ended a two-year legal battle and allowed a limited form of financial aid overlap.

After conducting a large-scale fight against the sharing of admissions and financial aid information, the government agreed that institutions of higher learning with full need-based financial aid and need-blind admissions can share some financial information about students who have been admitted to more than one of the qualifying schools.

The decision was hailed by MIT as a victory in its fight to once again allow the university to share financial aid information with the eight schools of the Ivy League, as was done from 1958 to 1991.

But while MIT may have won its battle against the Justice Department, members of the Ivy League seem to have almost given up on the overlap war.

The Official Word

The settlement, announced December 22, 1993, ended more than two years of litigation in an antitrust suit which charged MIT with joining the eight Ivy League schools to fix the prices of college educations.

According to court documents, "in 1991, the Antitrust Division of the Justice Department brought this suit alleging that the Ivy (League) Overlap Group unlawfully conspired to restrain trade in violation of section one of the Sherman Act... by (1) agreeing to award financial aid exclusively on the basis of need; (2) agreeing to utilize a common formula to calculate need; and (3) collectively settling, with only insignificant discrepancies, each commonly-admitted student's family contribution toward the price of tuition."

Harvard and the other Ivy League schools decided in 1991 not to fight the government. They signed a "consent decree" under which they agreed to stop the joint setting of financial aid awards.

In 1992, a district court found the Ivy schools and MIT guilty of violating antitrust laws. Last September, however, an appeals court ordered a new trial, declaring that the district court had not sufficiently debated MIT's position.

Court documents say the appeals judges "hold that the district court erred by failing to adequately consider the procompetitive and social welfare justifications proffered by MIT."

But the appeals court did rule that financial-aid guidelines are governed by federal antitrust laws, according to court records.

The new settlement permits colleges to share information about financial aid awards, but only among schools which guarantee need-blind admissions and full need-based aid. Individual family contributions cannot be determined.

After the Settlement

When the Justice Department first brought suit against the Overlap Group in 1991, most schools, including all of the Ivy League institutions, fell into line. But several top college officials, while staying out of MIT's court battle, expressed hope that the school would be successful.

"MIT did a really extraordinary job," President Neil L. Rudenstine says of the fight. "I think they fought a hard case for a long time with tremendous energy and lots of resources, so to reach a settlement at all was a major achievement."

In December 1992, a group of higher education associations including the American Council on Education, the United Negro College Fund, the National Association of Independent Colleges and Universities (AAU) filed briefs supporting MIT's position.

"We supported the idea of asking the court to look at the broader social context of the case," says Peter F. Smith, the AAU director of public affairs.

And since the settlement, members of the original overlap group have said they consider the agreement a victory.

In a statement released after the settlement, MIT President Charles M. Vest said the settlement will enable schools to spread out financial aid dollars over the maximum number of candidates.

"This decision enhances competition between colleges on the quality of education," Vest said. "It re-establishes the principle that colleges, in awarding their funds for scholarships, can follow the...principle that because funds are limited, financial aid in the forms of loans and grants are awarded to students who could not attend college without that financial assistance."

George Rupp, president of Columbia University, also released a statement in December which echoed Vest's comments.

"The settlement reached...by MIT and the Justice Department is a welcome though limited step forward," Rupp said. "By allowing cooperation among participating schools on financial aid policy, it will increase the number of students who will benefit from need-based aid, a highly desirable goal."

Just Not Enough

The new settlement, however, is probable not enough to allow the return of Overlap, according to the leaders of several Ivy League schools.

"From a practical point of view, very few institutions will find that they will be able to commit to this because they simply can't afford it economically," Rudenstine says. "It's possible that there would not be any group sharing information."

"It anything happens at all, it will be a much more restricted and much smaller group, which is unfortunate because what I was hoping for was an enlarged group of schools," he adds.

Provost Jerry R. Green says he disagrees with the premise behind the Justice Department's anti-trust action.

"[Overlap] made very limited resources go farther, and it made a Harvard education available to people to whom it would not have been available at all," he says. "I personally would like to see financial aid dollars go as far as possible."

Some students, however, may disagree with Green. Dean of Admissions William R. Fitzsimmons '67 says that the 10 percent increase in applicants to Harvard this year was caused by students applying to more schools than usual. One of the reasons, he says, could be that students think the current absence of overlap will force schools to offer more financial aid. (See related story, page 1.)

Other officials, however, say they agree with Green and Rudenstine that the agreement's guidelines will severely limit the number of schools who can and will join a new overlap group. And that means fewer schools will work together to provide financial aid to the largest number of students.

A Yale spokesperson says that the New Haven university is also concerned about the limits of the agreement.

"We have concerns about the restrictions. Not as they pertain to us, because they don't really pertain to us, but as they pertain to other institutions," says Gary G. Fryer, Yale director of public affairs and special assistant to the president. "The restrictions are onerous."

Cornell spokesperson Sam R. Segal says that the school is especially reluctant to enter into an agreement with the Justice Department--in part because it is reconsidering its practice of full need-based financial aid due to financial pressures.

"We'd have to make a commitment to stay that way. It's something that's unrealistic to ask colleges to do," Segal says. "It's a precarious situation, particularly for schools that have a smaller endowment. And Cornell is relatively small per student."

Other schools are saying they will stick with their need-determined financial aid policies, but not because of the terms of the agreement.

"Columbia, fortunately, can continue to admit students on a need-blind, full-need basis," Rupp's statement said.

"We're going to stick to our policy, and a good number of other institutions will stick to their policies," Rudenstine said. "That's a little different than signing an agreement under the Justice Department's supervision to commit to that."

Rudenstine also says that the agreement has effectively prohibited many schools from participating in even limited overlap.

"It seems clear to me that of the maybe 30 or 40 institutions, including the group of liberal arts colleges, who used to exchange [information]... the number that could conceivably think about this would be vastly reduced, if any," he says. "Even the Ivy League institutions are thinking very hard."

Rudenstine says that he doesn't expect the settlement to result in schools adjusting their admissions and financial aid policies to fit the requirements.

"You might imagine relatively no change in the number of institutions committed to need-blind/need-based," he says. "They might not see this sign-up as particularly helpful to them."

Outside the Ivies

Although all of the Ivy League schools have policies of need-blind admissions and full-need based aid, many of the liberal arts colleges which shared information do not have such policies.

"For the overwhelming majority of American colleges and universities, fulfilling these twin pledges--however desirable in theory--is in fact an economic impossibility," Rudenstine says.

Green says he agrees with Rudenstine. "As the settlement is written...it is, in fact, very difficult for schools to sign an agreement," he say. "Harvard could, a number of other universities could, but many universities comparable to Harvard, many of the original members of the overlap group, could not sign anything."

"There are plenty of schools outside the original overlap group who would have joined an agreement like the original overlap agreement who won't be able to," he says.

To the Law?

Officials of several Ivy schools, including Yale President Richard C. Levin, have suggested possible legislative action to broaden the scope of the original agreement.

Both Green and Rudenstine say that Harvard would participate in any action. "If there were to be a broad aid agreement, we'd have to have legislative relief," Rudenstine says.

"Such action is worthy of further pursuit," Fryer says. "But at the moment nothing's happening."

In addition, 1992 legislation which allows discussion of financial aid policies will expire this summer, according to Robert K. Durkee, Princeton's vice-president for public affairs.

Durkee says that new legislation incorporating the settlement guidelines and possible expanding the agreement to include more schools would need to be enacted as soon as possible--preferably before the old regulations expire.

There are two basic differences between the old legislation and the MIT-Justice Department settlement which would have to be part of any new action, he says.

First, Durkee says, "the language in the settlement is clearer than the language in the legislation on the question of schools reaching agreement about policies determining financial aid."

Second, the legislation does not speak to the question of schools sharing information about students. The settlement says that basic information about common applicants can be shared before awards are made. After awards are made, schools may do an "aggregate analysis" to identify schools deviating from the agreed upon policies.

A spokesperson from MIT says the school is open to further legislation.

Kenneth D. Campbell, director of MIT's news office, says: "Because the Ivies are reluctant, I guess some sort of legislation would be needed to make people feel more at ease."

The Ivy Group

But no final decisions about the future of the overlap group or legislative action have been made, according to Rudenstine, current chair of the Ivy Group.

"Right now it's more a question of individual institutions consulting with their boards, consulting with their admissions officers," he says. "They are thinking very hard, because it's not only a question of immediate commitment--it's a prospective commitment to full need-blind admissions and full need-based aid for all students."

The group, which last met in December before the settlement was announced, will meet again until late May. And Overlap will be on their agenda, Rudenstine says.

But the president adds that he and other Ivy league officials have discussed the settlement on the telephone since it was announced in December.

"It is my impression that people are very reticent to enter into the agreement that has been reached with the Justice Department," he says, "I have not heard of any decisions [that are] positive."

Durkee says: "Even those who can qualify have serious reservations about entering into an agreement with the government which would govern policies on admission."

Until decisions are made, the Overlap schools will continue to make financial aid decisions individually, officials say.

MIT officials, though, say they are still hopeful for the future of Overlap, but the decision is up to the Ivy League schools.

"We obviously can't get together if the other Ivies don't want to on that ground," Campbell says. "The ball is in their court."