Judge rules MIT broke antitrust law

A federal judge ruled last week that the Massachusetts Institute of Technology violated antitrust laws by setting joint financial aid policies with the University and other Ivy League colleges. In a long-awaited opinion, Judge Louis Bechtle found that MIT's participation in the Ivy Overlap Group -- whose members met until 1991 to coordinate financial aid offers for applicants accepted at more than one of the schools -- was a form of illegal price-fixing. Bechtle's decision means that the University cannot discuss financial policies with any other college or university, and increased competition for students could lead to the end of the University's need-blind admissions policy, administrators said. Barring a successful appeal by MIT, the decision will bring a permanent end to meetings of the Overlap Group, a collection of 23 private colleges and universities which made agreements on financial aid policies for more than 30 years. The group stopped meeting in 1990 after all other members signed a consent decree agreeing to end the Overlap meetings rather than fight an expensive lawsuit. If MIT had won the suit, the meetings could have resumed. Under the Overlap agreements, financial aid officers from member schools would meet three or four times each year to reach agreements on how to distribute financial aid. At the spring meeting, just prior to sending aid packages, aid officers would swap information about how much money they planned to offer students who had been admitted to more than one of the schools. If the packages varied by more than several hundred dollars, officers would make their offers closer to those of other schools. Bechtle called that practice, which MIT defended as the best way to avoid bidding wars, a form of price-fixing. During a ten-day trial this summer, lawyers for MIT tried to convince Bechtle that awarding financial aid is an act of charity, rather than commerce, and does not fall under the Sherman Antitrust Act, regardless of how the money is distributed. But in rejecting MIT's defense, Bechtle concluded that colleges are not charitable organizations and that financial aid is a discount off the price of attending college. In a 50-page opinion, Bechtle said that he could "conceive of few aspects of higher education that are more commercial than the price charged to students. MIT's attempt to disassociate the Overlap process from the commercial aspects of higher education is pure sophistry." Bechtle also was not swayed by MIT's warning that an end to Overlap could eventually force some schools to begin giving merit scholarships and abandon the twin policies of need-blind admissions and need-based aid. Citing MIT's large endowment and operating budget, Bechtle wrote that schools such as MIT should have enough money to continue those policies without Overlap, as long as they remain priorities for school officials. MIT's lawyers had claimed that Overlap meetings were the best way to insure that money went to students who needed it most. Unbridled competition for students, MIT asserted, would prove more damaging in the long run because it would likely force schools to offer some students more than they need, while decreasing the amount of aid available to truly needy students. President Sheldon Hackney said yesterday that Bechtle's ruling reflects a poor understanding of the financial crunch facing higher education and could make it harder for the University to maintain need-blind admissions in the future. "I think the erosion of current practices will be slow . . . but I also think inevitable," he said. The Justice Department announced its lawsuit against MIT in the spring of 1991, after a two-year government investigation of the Ivy Overlap Group concluded that the agreements were a form of price-fixing.