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MIT, Justice Dept. Will Go to Court for Overlap Group Meetings: 7: 7

By Karen Kaplan
Executive editor
____MIT will go to trial this April to defend itself against accusations made by the Department of Justice that the Institute, along with 22 other private colleges and universities, violated antitrust laws in meeting to discuss the financial aid packages offered to students admitted to more than one school.

The Justice Department investigation studied "alleged violations of the Sherman Act in connection with tuition, faculty salaries and financial aid at colleges and universities" within the so-called Overlap Group, which includes the eight Ivy League schools, Justice Department spokeswoman Gina Talamona said.

The Overlap Group did not meet as usual last spring "in light of the concerns that the Justice Department has expressed," Daniel Steiner, vice president and general counsel for Harvard University told The Boston Globe. "We thought that as a sign of good faith, we would not meet . . . while discussions are under way to resolve outstanding differences."

Normally the member colleges and universities meet to exchange information on the financial need of common applicants and agree to offer those students roughly the same financial aid packages.

The case will be tried in the Federal District Court in Philadelphia, where the attorney general filed suit. MIT's request to move the case to the US District Court in Boston was denied last summer.

In addition to MIT and the Ivy League schools, the Overlap Group includes Tufts University and Amherst, Williams, Middlebury, Colby, Bowdoin, Trinity, Wesleyan, Barnard, Wellesley, Vassar, Smith, Mount Holyoke and Bryn Mawr colleges.

MIT refused consent decree

Last spring, MIT declined to sign a consent decree that would have settled the suit with the Justice Department. All eight Ivy League schools signed the decree, former Attorney General Richard Thornburgh announced last May.

As part of the settlement, the Ivy League schools agreed "that they will no longer collude or conspire on financial aid," Thornburgh said. The schools "also agreed not to discuss or agree on future tuition or faculty salary increases," he said, although the issues of tuition and faculty salaries were not mentioned in the suit.

The settlement also bars direct or indirect agreements with any other college or university regarding financial aid formulas, individual financial aid packages beyond what is required by federal law, the offering of merit aid, and the setting of student fees and faculty salaries. The schools are also prohibited from exchanging information about budgetary plans or projections.

In addition to MIT, several of the schools which signed the consent degree said the Overlap Group meetings -- which they still contend were lawful -- assured that available financial aid money from universities and the government served the largest group of eligible students.

The objective of the meetings was to make it possible for students to "optimize their educational aims without regard for their financial means," Wrighton said.

He added that the meetings allowed schools to agree on the best financial packages for prospective students and freed them to "make a judgment based on their own interest about where they would like to go" rather than on which school offered them more aid.

Without the Overlap meetings, schools competing for the same students can use financial aid as an incentive, Harvard's Steiner said. He predicted that a "bidding war," in which applicants receive offers of financial aid whether they need it or not, would result.

Assistant Attorney General James F. Rill said at a news conference last May that the lack of merit-based aid was one of the concerns that led the Justice Department to file suit. He said the action was an effort to challenge the schools' alleged agreement that no merit-based aid would be offered and that the schools would follow a common formula for calculating need-based aid.

The Ivy League schools said they signed the consent decree in order to end a costly legal battle. Wrighton said he could not estimate what the cost of not settling out of court would be for MIT, but Vice President Constantine B. Simonides said the investigation has cost MIT "an awful lot" in terms of time and money.

No change in aid

Financial aid packages for students in the class of 1995, the first to have their aid decided without a meeting of the Overlap Group, were not very different from packages offered in previous years, said Leonard V. Gallagher '54, director of student financial aid. "MIT's financial aid offerings have not been affected by the suit" or by the end of the inter-school discussions, he said.

But the Institute's 1991 report on the "Admitted Student Questionnaire," a summary of the responses of students admitted to the class of 1995, indicated that the lack of conversations with other schools may have hurt MIT's competitiveness.

The report shows that of admitted students who chose not to enroll, 28 percent said that MIT offered them the smallest financial aid package of all the schools that accepted them. An additional 17 percent said MIT offered them financial aid that was lower than most of the schools that accepted them.

Stanford and Harvard/Radcliffe are MIT's two biggest competitors for students, according to Admissions Office Senior Secretary Elizabeth H. Johnson. Forty-five percent of students who chose Harvard over MIT and 32 percent of those who chose Stanford said that financial aid was a significant factor in their decision. However, Johnson warned that students often do not take the questionnaires too seriously.