William F. Smith: “Beginning in the mid-1950s, a number of private colleges and universities agreed to award financial aid solely on the…”

“Beginning in the mid-1950s, a number of private colleges and universities agreed to award financial aid solely on the basis of demonstrated need. These schools also agreed to use common criteria to assess each student's financial need and to give the same financial aid award to students admitted to more than one member of that group of schools. From the 1950s to the late 1980s, the practice continued undisturbed. In 1989, the Antitrust Division of the Department of Justice brought suit against nine of the colleges involved that engaged in this practice. After extensive litigation, the parties reached a settlement in 1993. In 1994, and again in 1997, Congress passed a temporary exemption from the antitrust laws that codified that settlement. It allowed agreements to provide aid on the basis of need only, to use common criteria, to use a common financial aid application form, and to allow the exchange of the student's financial information through a third party. It also prohibited agreements on awards to specific students. This exemption expires on September 30, 2001. H.R. 768 would make the exemption passed in 1994 and 1997 permanent.”