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MIT Files Notice of Appeal

MIT filed a formal notice of appeal Friday on the ruling that MIT's procedures in giving out $26 million a year in private scholarships violated the Sherman Antitrust Act.

The notice of appeal, to the Thuird Circuit Court of Appeals in Philadelphia, said in its entirety: "Defendant Massachusetts Institute of Technology hereby appeals to the United States Court of Appeals for the Third Circuit from the final judgment entered by United States District Court for the Eastern District of Pennsylvania on September 2, 1992 and from all orders and rulings that produced or led to that judgment."

Oral arguments probably will occur sometime in the Spring, following MIT's submission of its brief in December or January, a court observer said. A decision by the three-judge panel is usually made within three months after the arguments in appeals court.

The lower court decision, by Federal District Court Chief Judge Louis Bechtle after a 10-day trial in Philadelphia, held that private scholarship gifts by a non-profit university constituted commerce. He said it was a violation of the antitrust act for the colleges to agree to distribute their scholarship money solely on the basis of need as part of their policy of admitting students on the basis of merit regardless of their ability to pay.

The Ivy League colleges and MIT for more than 30 years had agreed to uniform principles for measuring need--essentially the same system adopted by theUS Office of Education in the 1960s and later adapted by Congress, both of which require that most federal aid be awarded exclusively on the basis of need. In the case of applicants who had overlapping offers of admission from more than one of the colleges, the colleges agreed to discuss significant differences in their judgments of the individual students' financial need.

In the June 25-July 9 trial, MIT said that Antitrust Division of the Justice Department the Sherman act was never intended to apply to the kind of arrangements worked out by the colleges for the assigning of essentially charitable funds. In his summation on July 9, MIT's attorney, Thane D. Scott of Palmer & Dodge, said, "MIT's function is to teach, to discover and to build. It is to leave to the next generation a better and more knowledgeable world. Yet in the eyes of the Antitrust Division, such an institution is indistinguishable from a manufacturer of toaster ovens or porcelain fixtures."

He quoted US Supreme Court Chief Justice William Rehnquist in his dissent in the 1984 NCAA-Oklahoma football case: "No decision of the United States Supreme Court suggests that associations of nonprofit educational institutions must defend their self-regulatory restraints solely in terms of their competitive impact, without regard for the legitimate non-economic values they promote."

In presenting its case, MIT said that financial aid is a gift policy, not a pricing policy, and that tuition covers only half the cost of a student's education. Fifty-seven percent of students receive aid at MIT. In Fiscal 1991, undergraduate scholarships totalled $26 million.

A version of this article appeared in the November 4, 1992 issue of MIT Tech Talk (Volume 37, Number 12).

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