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MIT, Justice Dept. Settle Overlap Case

By Eric Richard
Contributing Editor

After nearly three years of litigation, the Justice Department and MIT agreed to a settlement in the antitrust investigation of the financial aid practices of top colleges and universities.

At a Dec. 22 news conference President Charles M. Vest announced that the Justice Department had agreed to drop charges against MIT and allow financial aid officers to share information about prospective students under certain conditions.

The Justice Department had charged MIT and 22 other schools, including Ivy League colleges, with violating the Sherman Antitrust Act by discussing and agreeing upon the financial aid packages of individual students who had been offered admission to more than one of the schools.

Both sides claim victory with the December settlement.

"Throughout this entire case, the [Justice] Department has had one goal in mind -- to protect the interest of all students and their families in obtaining an affordable college education," said Robert E. Litan, deputy assistant attorney general for the Antitrust Division. "This settlement reaches that goal."

The Justice Department continues to believe that the Overlap process violated antitrust laws and that the agreement will prevent future violations, Litan said.

MIT also approved of the decision. "Our objective all along was to establish mechanisms by which colleges and universities could continue to pursue need-blind admissions." said Michael Gass, a lawyer representing MIT. "We are absolutely delighted with the [final] mechanism."

"The higher educational community now stands a much better chance of keeping financial aid focused on those who need it most, thereby enhancing access to our colleges and universities," Vest said.

Senator Edward M. Kennedy (D-Mass.) said, "I commend MIT and the Justice Department for reaching a settlement that is an important step in enabling working families to afford a college education."

"The Bush Administration should never have brought this antitrust case in the first place and I commend MIT for seeing this case through to a successful conclusion," Kennedy continued.

Modern system created

"The settlement that has resulted from these discussions [with the Justice Department] creates principles and procedures that permit future agreements and interactions among universities to implement workable systems of need-based financial-aid," Vest said. "In short, this establishes a more modern system to replace the overlap process."

Gass said the case was important because MIT took a stand against government intrusion by saying that "the federal government should not be in the position of dictating educational policy."

Under the guidelines agreed to in the settlement, non-profit schools can participate in cooperative financial aid arrangements only if they agree to practice need-blind admissions and provide full financial aid to meet the need of their students.

In deciding the amount and composition of financial aid awards, these schools will be permitted to exchange the financial information of overlap students via a central computer.

Schools will be able to compare the figures they received regarding family and student assets, income, allowances against assets and income, number of family members, and the number of siblings in colleges. They are explicitly prohibited from discussing the amount of family contribution or the mix of grants and self-help for individual applicants.

Schools are also prohibited from collaborating in setting tuition or faculty salary levels.

"MIT's policies in the short run will remain the same -- a commitment to need-blind admissions and need-based aid," Vest said. "In the long run, we hope that we will once again be able to work directly with other leading universities to strengthen mutual commitment to these policies."

Gass said that while it is too soon to have new discussions beginning, "over some period of time ... schools which are willing and able to will voice their interest." Gass concluded, given time "there will be a renewed form of Overlap."

"We stood to gain a future in which the access of America's brightest students to MIT and other fine universities would be based on their intellectual abilities rather than their financial capabilities. We also stood to demonstrate that there are limits to federal intrusion in the affairs of private institutions," Vest said.

According to both Vest and Gass, reaction to the settlement has been overwhelmingly supportive.

"In general, there is real support and real happiness with the result," Gass said. "Everybody views it as a major victory."

"Everywhere I go, I am stopped by people supporting and congratulating us," Vest said.

"I am very proud to be a member of this university," Vest said. "We stood up for the principles we believe in. ... We are also extremely grateful for the support we have received from those who have no MIT connection but who have shared out strong belief in the principles of need-based financial aid."