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Financial Aid Trial Set for June 25

The federal government's civil suit against MIT's undergraduate financial aid practices is "unlikely" to be resolved without a trial, the judge said last week. He ordered the antitrust case to trial on June 25.

At a procedural hearing in Federal District Court in Philadelphia on April 23, Chief Judge Louis Bechtle did not rule formally on the government's request for a summary judgment but said it would be "unlikely" for the Court to issue one in this case. The judge then set the June 25 trial date and asked the government and MIT to work cooperatively to narrow the list of items on which there is factual disagreement in order to prepare the case for trial.

"A trial is needed and we want to proceed to trial. We are happy about that," said MIT's attorney, Thane D. Scott of the Boston firm, Palmer & Dodge.

MIT maintains that the commercial, business activities of universities are subject to the Sherman Act. However, the activities challenged by the government are not business activities but rather are non-commercial, charitable, financial aid activities which are essential to MIT's educational mission. In the 102 years of the Sherman Antitrust Act, it is unprecedented for the law to be applied to a charitable activity of a bona fide educational institution, MIT says.

The government suit threatens to "injure or destroy" MIT's need-blind admission policy, according to a brief MIT filed for the April 23 procedural hearing. MIT's educational policy provides that all undergraduates are admitted on merit, with a commitment to meet the full, demonstrated financial need of every undergraduate student.

There was no financial gain to MIT through its financial aid practices. "The challenged conduct did not affect how much financial aid was provided in the aggregate, but did determine to whom the aid was awarded," said the MIT statement to the court.

Contrary to some news reports, which asserted the government was suing MIT on its tuition policies, the government's civil antitrust suit is focusing solely on the way financial aid is administered.

An MIT spokesperson noted that the cost of education at MIT is about double MIT's tuition. For example, in 1991, tuition was $141 million below cost. The cost of education at MIT was $280 million, while the income from tuition was $139 million.

In a one-count complaint, filed last year, the Department of Justice claimed that MIT's commitment to need-based financial aid violated the Sherman Antitrust Act when implemented in cooperation with other nonprofit colleges and universities. The government argued in an April 3 motion that a trial was not necessary and instead requested the judge to hand down a summary judgment against MIT without a trial.

The government commenced the suit against MIT last May, after the Institute declined to settle the case by signing a consent decree. The Ivy League schools were also named in the government complaint, but the case against them ended when they agreed to the consent decree. In declining to sign the consent decree, MIT said it was convinced that its financial aid practices were noncommercial, proper, and did not violate the Sherman Antitrust Act, which bars unreasonable restraints on commerce.

In its response for the April 23 hearing MIT said, "For more than 30 years the defendants, and other schools, participated in a cooperative financial aid system that opened the doors of a college education to poor but able students. . .

"Both the Congress, through its publicly funded financial aid programs, and the defendants, through their coordinated use of charitable funds, sought to maximize educational access by providing financial assistance only to those who needed aid in order to attend college. Those students who, as the Antitrust Division says, 'merited' but did not need financial aid, were by statute prohibited from receiving federal aid, and were by agreement ineligible to receive private charitable funds.

"As a result, those limited aid funds, whether public or private, were used to meet the greatest need of the greatest number-rather than being diverted to those wealthier students who had no need but who were, in the Antitrust Division's view, more 'deserving' of charitable handouts," the MIT statement said.

"MIT's ability to continue its commitment to meet the full need of every undergraduate student admitted under MIT's need-blind admission policy will be injured or destroyed by the absence of a viable system of need-based aid. . .

"The challenged conduct was intended to promote, and did promote, educational access and opportunity for talented but economical disadvantaged students. It was not 'commercially' motivated but rather was based upon sound educational policy, and was intended to promote, and did promote, the same public policies as those promoted by Congress through the federal financial aid programs," the MIT statement concluded.

On May 1 MIT will file its formal opposition to the government's April 3 summary judgment motion. MIT expects the June 25 trial to last approximately two weeks.

A version of this article appeared in the April 29, 1992 issue of MIT Tech Talk (Volume 36, Number 28).

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