U.S., Ivy League agree to settle antitrust suit MIT, also charged, to stand its ground

WASHINGTON HC L L&B — WASHINGTON -- All eight Ivy League colleges, facing government charges of an illegal plot to fix student fees, agreed yesterday that they would not talk or work together for the next decade to set amounts for student aid, tuition, room and board, or faculty salaries.

They will be allowed, however, to have agreed rates within the Ivy League for financial aid given to student athletes.


After a long investigation that is still going on for other, unnamed FTC colleges, the Justice Department charged the eight well-known Eastern colleges -- along with the Massachusetts Institute of Technology -- with an antitrust conspiracy over the past 11 years to plan together how much financial aid to give needy entering students.

At the same time that the charges were filed in federal court in Philadelphia, the government and the eight Ivy League colleges settled out of court. MIT did not do so, and thus its case may have to go to trial.


MIT's provost, Mark S. Wrighton, said in a statement that the university "does not believe that our practices violate the antitrust laws." For that reason, he said, MIT did not join in the settlement.

Justice Department officials refused to say what other colleges may still be under investigation. At one point, the probe was believed to include 50 or more colleges.

Although the antitrust charges disclosed yesterday aimed only at a plot to fix the amount of student financial aid, the settlement went much further than that.

The eight colleges agreed that they would not swap information about student tuition or room and board rates, or about faculty salary levels, along with their promise not to plot financial aid levels.

Nothing was said in court papers to show why the colleges had agreed to such broad promises on their finances, but Justice Department officials hinted that they had been gathering evidence about joint action in those other areas, too.

The eight Ivy colleges -- among the most prestigious schools in the nation -- are Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, Yale and the University of Pennsylvania.

Attorney General Richard L. Thornburgh, who disclosed the charges and the settlement personally at the Justice Department, said the government hoped that the deal would now bring about competition within the Ivy League over student finances and faculty pay.

He said, however, that he "would not anticipate anything specific" in bringing down high tuition rates in the Ivy League, where the annual fees run upward of $18,500 per student.


He also said he could not estimate how much money students might save in the future as a result of the new legal pact on competition.

Each university, Mr. Thornburgh noted, remains free to decide on its own what its student fees and faculty salaries will be.

Thus, no college involved in the settlement has promised to do anything other than not to plot with others over such matters.

The settlement does not provide any money payments to the federal government, because it did not claim to be damaged.

But, if any college violated the 10-year pact, that college would be subject to fines.

Parents or students who believed that they suffered financial damages from the plot would be free to sue on their own; at least one such case already has been filed, department officials said.


Even though those parents or students could use the settlement as a basis for demanding information from the colleges about their joint dealings, the settlement is not formal proof, by itself, that a plot did exist or that any college broke the law.

In the charges filed yesterday, the Justice Department claimed that the eight colleges, plus MIT, had been plotting together since at least 1980 to agree upon the amount of financial aid they would give to needy students and the amount of fees they would insist that the families of those students pay.

The nine colleges, according to the charges, sent financial aid officers to meetings of "the Overlap group." There, officers allegedly exchanged information about needy students whom they were admitting and compared notes on what aid those students were to get.

The idea behind the plot, the government said, was to make sure that those students would get the same financial aid, no matter which of the nine colleges they finally chose to attend, thus eliminating price competition between the colleges for those students.