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Managing America: Education

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Week Ending May 2, 2008

H.R.1777 To amend the Improving America's Schools Act of 1994 to make permanent the favorable treatment of need-based educational aid under the antitrust laws.

This bill concerns itself with financial aid schemes in Ivy League schools. The schools affected are the Ivy Overlap Group - Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, Penn, Yale, and MIT, and the Pentagonal / Sisters Overlap Group - Amherst, Williams, Wesleyan, Bowdoin, Barnard, Bryn Mawr, Mount Holyoke, Radcliffe, Smith, Vassar, Wellesley, Colby, Middlebury, Trinity, and Tufts.

The bill report explains that from the 1950’s through the late 1980s those colleges and universities “agreed to award institutional financial aid (i.e., aid from the school's own funds) solely on the basis of demonstrated financial need.” The schools agreed to common principles to assess the student’s financial need and to give the same financial aid to students who were admitted to more than one member of the group.

In 1989 the Justice Department Antitrust Division sued the members of the Ivy Overlap Group to enjoin the practice. In 1991 the Group entered a consent decree and ended it.

A year later Congress passed a short term exemption to the antitrust decision allowing the schools to award financial aid on a ‘need-blind’ basis. The legislation expired in 1994. MIT, however, continued to contest the Justice Department lawsuit but the district court upheld the antitrust decision. On appeal, MIT won a reversal. Congress passed another exemption from anti trust rules allowing for agreements to provide aid on the basis of need only but also allowed for the exchange of student financial information through a third party.

Extensions of the exemption continued until today when this bill aims to make the 1994 exemption permanent.

The report explains that this is necessary to make student aid available to the broadest number of students solely on the basis of demonstrated need. Schools feared that without the exemption they would have to compete through financial aid awards for top students and the results would be that those top students would get an excess of the available aid while other qualified students with the same or greater need would get less or none.

Sponsor:  Rep. William Delahunt (MA-10^th)

Vote: Passed House by voice vote April 30, 2008.ended by the Senate. Passed House as amended September 25, 2008. Passed Senate by Unanimous Consent September 25, 2008.

Cost to the taxpayers: “CBO estimates that implementing the bill would have no significant effect on the Federal budget. Enacting H.R. 1777 would not affect direct spending or revenues.”

Earmark Certification:   In accordance with clause 9 of rule XXI of the Rules of the House of Representatives, H.R. 1777 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.

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