Colleges as Price Fixers

June 10, 1991

Colleges can be seen as competitive businesses whose consumers deserve the same legal protection as any others. The Justice Department charged nine prestigious universities for conspiring to restrain price competition on financial aid to students. The eight known as the Ivy League (Brown, Columbia, Cornell, Dartmouth, Harvard, Pennsylvania, Princeton and Yale) consented to quit the practice in return for dropping the charge. The ninth, Massachusetts Institute of Technology, refuses to quit anything and girds for trial.

As a result, the Ivy League schools will no longer participate in the 23-college "Overlap Group." This group met every spring and fixed the financial aid that all would offer to students applying to more than one of these schools. Prospective students were forced to choose among those colleges on the basis of academics, social life or something other than aid. They could get the schools into a bidding war only by applying outside the group. Under fire, the Overlap Group did not meet this spring. Without the Ivy League, it probably cannot function.

But that is not all the Ivy eight agreed to end. They pledged not to swap other information of a pricing nature, such as intentions on tuition and salaries. And here the investigation launched by Attorney General Dick Thornburgh two years ago is heading into poor visibility.

Colleges are much more than competitive businesses. At times, they have even been known to see themselves as nonprofit centers of learning dedicated to free exchange of information and ideas. Indeed, colleges do trade information, department by department, administrator by administrator, more often from anxiety than craving to restrain trade. When this tendency pops up, it should be encouraged, not prosecuted.

The anti-trust probe, which continues, has a chilling effect. The Justice Department sought information from 57 schools, Johns Hopkins University and Goucher College among them. Just the bundling of information and employment of lawyers is a burden. The inquiry should be brought to a rapid conclusion.

If colleges are treated solely as competing businesses, that aspect will dominate their thinking. This should not be the aim of the education president. The most selective colleges of the Northeast can survive without the price-fixing of financial aid. But the less robust colleges cannot maintain their mission intact under permanent investigation for anti-trust infractions of an unspecified nature.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.