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Overlap Agreement Limits Cooperation

By Eric Richard
Contributing Editor

While many have praised the Institute and the Justice Department for reaching a settlement in the Overlap suit against MIT, university officials across the country are expressing concern over the limitations of the agreement.

The agreement includes a guideline requiring schools to commit to policies of need-blind admissions and full need-based aid in order to participate in cooperative financial aid arrangements. Officials fear this stipulation because many schools cannot afford to make these commitments and will be excluded from making cooperative aid arrangements.

"MIT should be applauded by all educational institutions for having pursued this case so intensively," said Neil L. Rudenstine, president of Harvard University and chairman of the Ivy League.

"At the same time, the practical effect of today's agreement, unless followed by additional action, will be severely limited. Under the new agreement, it would be financially impossible for all but a very small handful of the nation's colleges and universities to participate in the kind of cooperative arrangements that the settlement defines as acceptable," Rudenstine continued.

In 1991 The Justice Department charged MIT and 22 other schools, including the Ivy Leagues, 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.

On Dec. 22, MIT and the Justice Department agreed to settle the case and outlined a mechanism by which non-profit colleges would be allowed to cooperate in financial aid agreements. However, the agreement stipulates that all schools engaging in such cooperation must commit to policies of need-blind admissions and full need-based aid.

The new system

The final agreement "enhances competition between colleges on the quality of education," said President Charles M. Vest. "It re-established the principle that colleges, in awarding their funds for scholarships, can follow the same principles that the U.S. government has followed in higher education. That principle is that because those funds are limited, financial aid in the form of loans and grants are awarded to students who could not attend college without financial assistance."

"This commitment [to providing full financial aid] ensures that students will not lose the opportunity to attend MIT or other participating colleges because they or their families cannot afford to pay," said Robert E. Litan, deputy assistant attorney general for the Antitrust Division of the Justice Department.

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

"Philosophically and economically, that is the stumbling block," said Dan Bedderton, director of financial aid for Princeton University.

While Bedderton said that Princeton does not have a problem committing to providing such assistance to its students, he felt many smaller schools would not be so fortunate. "When it comes down to the bottom line of pocket books ... many of them would say they cannot afford it."

Michael Gass, attorney for MIT, said the issue of limited financial resources in smaller schools presented difficulties. "We've been trying to look out for other colleges as well," Gass said. "The benefits of this mechanism should be available to anybody."

Small colleges react

"I see the issues that MIT fought for as being fairly fundamental to financial aid," said Joe Paul Case, dean of financial aid at Amherst College. "However, I am concerned that [under the settlement] this is limited to only institutes with vast financial resources."

While Case did not predict any immediate changes in Amherst's financial aid policies, he did say that Amherst was "interested in what Overlap did" and currently provides both need-blind admissions and full need-based aid.

"I am concerned about the specifics of who may participate," Case said. "It seems to me that [these issues have been] rather fundamental to the direction of financial aid over the last four decades, and in that sense, it results in a falling short of what I had hoped for."

Walter H. Moutlon, director of financial aid for Bowdoin College, said that Bowdoin also currently uses need-blind admissions and full need-based aid. However, he said that these policies are based on year-to-year resources and said, "there is no way we can guarantee" being able to provide these services.

Moutlon said that the requirement imposed by the settlement "substantially reduced the value of the decision."

"If you make that pledge, you don't know whether you will be able to make it for any period of time," said Mary Patterson McPherson, president of Bryn Mawr College, in The Chronicle of Higher Education.

"The settlement agreement reached ... by the Justice Department and MIT is a first step -- though only a first step -- toward recognizing the importance of certain cooperative arrangements among colleges and universities for student financial aid," Rudenstine said.