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After over two years of legal wrangling, the U.S. Justice Department last month settled its case against the Massachusetts Institute of Technology for allegedly sharing financial aid figures with Ivy League schools. The government's antitrust charges against MIT were dropped, and the Institute and the Justice Department announced a new system under which schools can legally collaborate on financial aid. Under the new guidelines, for schools to share financial aid information they must agree to provide need-blind admissions and to fully meet the financial need of all admitted students. The new guidelines allow schools who have met the requirements to prohibit merit-based scholarships, discuss the methods used to compute financial aid and develop joint financial aid applications. These schools may also exchange financial and personal data about commonly-admitted students through a central computing center. However, schools cannot discuss the specific aid packages offered to students. The policy does let schools submit their individual student financial aid packages to a third-party, who can tell them whether other schools in the joint agreement are offering similar financial aid packages. Still, under the settlement, schools may not agree on the mix of grants, loans and work-study to be awarded to each student. In several aspects, this new system is very different from the old ways schools used to coordinate financial aid packages. From 1958 to 1991, MIT's financial aid officials met with other members of the Overlap group -- made up of MIT, the Ivy League schools and 14 other private colleges and universities in the northeast -- to collaborate on the amount of financial aid they would offer commonly-admitted students. It was argued that by working out a common financial aid offer for commonly-admitted students, colleges avoided costly bidding wars for students and students could select colleges according to educational, and not financial, reasons. But, in 1989, the Justice Department began an investigation of the Overlap group and 34 other colleges and universities nationwide. The government threatened to charge these schools with violating antitrust laws, arguing that fixing the amount of financial aid offered to commonly-admitted students was tantamount to price fixing. In 1991, the Overlap group stopped meeting and the Ivy League schools, including the University, agreed to stop sharing financial aid information. Only MIT refused to settle with the government. In the past two years since Overlap institutions stopped meeting, some schools, including Brown University, have backed away from need-blind admissions. As such, many have said that fears of bidding wars for talented students have been realized. Response to last month's settlement has been varied. MIT President Charles Vest said the agreement "signals a recommitment to make the best in American higher education accessible to the most talented students without regard to their circumstances." But Harvard University President Neil Rudenstine said in a prepared statement that admitting students without regard to need and promising to meet the full financial need of all admitted students would be "simply beyond the means" of most schools. He called for further negotiations with the government. "It's uncertain what this means for each of the Ivy institutions, but my hope is it will reduce the bidding war that developed over the last few years," University Admissions Dean Lee Stetson said last night. "It is clear the original decision opened the door for a potential draining of resources away from the most needy students."

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