How did the price fixing by elite universities end? Not with a bang, but with a whimper, as the New York Times reported in 1991.

Facing Justice Department charges that they violated Federal antitrust laws, the eight colleges and universities in the Ivy League have agreed to stop sharing information on student financial aid and to avoid collaborating on tuition increases.

Under a consent agreement signed yesterday and announced in Washington by Attorney General Dick Thornburgh, the eight institutions — Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, the University of Pennsylvania and Yale — agreed to end their policy of jointly agreeing to base all financial aid awards solely on need, without considering a student’s merit or trying to compete with the others to get the choicest students by offering them more aid. Though the joint policy is ended, individual institutions can still offer aid strictly on need.

The universities also agreed to stop holding an annual meeting at which they and 15 other prestigious Northeastern institutions jointly discussed the financial aid applications of 10,000 students who had been accepted to more than one institution in the group. The purpose of this “overlap meeting” was to agree to uniform financial aid offers.

“Students and their families are entitled to the full benefits of price competition when they choose a college,” Mr. Thornburgh said at a news conference in Washington. “This collegiate cartel has denied them the right to compare prices and discounts among schools, just as they would in shopping for any other service or commodity.

“The most unfortunate aspect of this conduct is that it had a disproportionate impact on the students who needed the financial aid the most.”

Benno C. Schmidt Jr., the president of Yale, called Mr. Thornburgh’s statement “grossly unfair.” Daniel Steiner, vice president and general counsel at Harvard, said, “Our practices served the good social purposes of making sure that a limited amount of financial funds went to the neediest students.”

The Ivy League institutions, M.I.T. and 14 other colleges and universities in the Northeast met openly each spring to review financial aid applications from students admitted to two or more of the member institutions.

Officials at Columbia University said they would try to get Congress to enact laws that would make cooperation permissable.

By wresting an agreement from the eight Ivy League institutions, the Justice Department has in effect put an end to the annual meeting to review overlapping applications, even though 15 of the group’s 23 members are not covered by the decree. The group had already canceled the meeting it would have held this spring, citing uncertainties brought on by the investigation.

Ivy League officials continue to support the concept behind cooperatively determining financial aid.

“Awards in excess of need either divert resources from needy students or require an increase in revenues or reductions in other programs to support aid above the level of need,” said Harold T. Shapiro, the president of Princeton University.

By keeping financial aid awards standard, university officials said, students can then decide where to go based solely on academic and personal considerations.

But some students and their parents don’t buy that argument. “I think they’re just making sure they’re not outbidding each other,” said Maria G. Desmond of Baltimore, whose 17-year-old son, William, was accepted by Harvard, Princeton and Yale this spring. Harvard offered a package of grants, loans and work study of $12,000 a year toward the roughly $21,000 annual cost of tuition, room and board and fees. Yale offered $12,300; Princeton $11,575.

“If a matter of price fixing like that had happened in the commercial field, there would be all sorts of charges,” Mrs. Desmond said. Her son has turned down all three offers to attend Loyola of Baltimore, where his tuition is free because both his parents teach there.

Williams was a part of the Overlap Meeting, but was not charged in the suit. If I were a better person, I would add a section to the campus controversy section at Willipedia to cover this topic. Strangely, I could not find a good overview of the scandal anywhere on the web.

Note how hollow the protests from places like Harvard sound 15 years later. Harvard always had plenty of money to spend on financial aid. The dollars available were never, in any meaningful way, “limited.” Harvard would just prefer to spend that money elsewhere. Highly desirable applicants are better off since colleges can no longer collude.

Facebooktwitter
Print  •  Email