Bill Extending Antitrust Exemption for College Financial Aid Awards Passes House

This posting was written by John Scorza, CCH Washington Correspondent.

Colleges and universities would be allowed to collaborate with each other about administering need-based financial aid without fear of violating antitrust laws, under a bill approved on April 30 by the House.

The bill—the Need-Based Educational Aid Act (H.R. 1777)—would make permanent the current antitrust exemption the institutions now enjoy. The exemption is set to expire on September 30.

For more than 50 years, several private schools have used common practices to assess students’ financial needs and to give the same financial aid awards to students admitted to more than one member of the group of schools.

In the late 1980s, the Antitrust Division challenged the practice. Congress in 1992 passed a temporary antitrust exemption authorizing the schools to continue the practice. Congress has extended that safe harbor on several occasions.

Supporters of the measure say it is necessary to ensure that a greater number of students receive aid.

“The need-based financial aid system makes financial aid available to the broadest number of students solely on the basis of demonstrated need,” remarked Rep. John Conyers (D-Mich.), chairman of the House Judiciary Committee.

“The schools have been concerned that without this exemption, they would be required to compete – through financial aid awards – for the very top students, which could result in a system in which the very top students receive an excess of the available aid while the rest of the applicant pool receives less or none at all,” said Rep. Conyers.

Sponsored by Representative William Delahunt (D-Mass.), the bill was introduced in the House on March 29, reported by the Judiciary Committee on April 10, and passed the House by voice vote on April 30. The legislation was received in the Senate, read twice, and referred to the Judiciary Committee on May 1.