[Congressional Record Volume 143, Number 89 (Monday, June 23, 1997)]
[House]
[Pages H4145-H4146]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      NEED-BASED EDUCATIONAL AID ANTITRUST PROTECTION ACT OF 1997

  Mr. SMITH of Texas. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 1866) to continue favorable treatment for need-based 
educational aid under the antitrust laws.
  The Clerk read as follows:

                               H.R. 1866

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Need-Based Educational Aid 
     Antitrust Protection Act of 1997''.

     SEC. 2. CONTINUATION OF FAVORABLE TREATMENT FOR NEED-BASED 
                   EDUCATIONAL AID UNDER THE ANTITRUST LAWS.

       (a) Amendments.--Section 568 of the Improving America's 
     Schools Act of 1994 (15 U.S.C. 1 note) is amended--
       (1) in the heading of subsection (a) by striking 
     ``Temporary'',
       (2) by striking subsection (d), and
       (3) by redesignating subsection (e) as subsection (d).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect immediately before September 30, 1997.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas [Mr. Smith] and the gentleman from Massachusetts [Mr. Frank] each 
will control 20 minutes.
  The Chair recognizes the gentleman from Texas [Mr.Smith].


                             General Leave

  Mr. SMITH of Texas. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days to revise and extend their remarks 
on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?

[[Page H4146]]

  There was no objection.
  Mr. SMITH of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, today the House considers H.R. 1866, the Need-based 
Financial Aid Antitrust Protection Act of 1997. Beginning in the mid-
1950's, a number of private colleges and universities agreed to award 
institutional financial aid; that is, aid from the school's own funds, 
solely on the basis of demonstrated financial need. These schools also 
agreed to use common principles to assess each student's financial need 
and to give essentially the same financial aid award to students 
admitted to more than one member of the group.
  From the 1950's through the late 1980's the practice continued 
undisturbed. In 1989, the Antitrust Division of the Department of 
Justice brought suit against nine of the colleges that engaged in this 
practice. After extensive litigation the parties reached a settlement 
in 1993. In 1994, Congress passed a temporary exemption from the 
antitrust laws that basically codified that settlement. It allowed 
agreements to provide aid on the basis of need only, to use common 
principles of needs analysis, to use a common financial aid application 
form, and to allow the exchange of the student's financial information 
through a third party.

                              {time}  1245

  It also prohibited agreements on awards to specific students. It 
provided for this exemption to expire on September 30, 1997.
  Under this exemption, the affected schools have recently adopted a 
set of general principles to determine eligibility for institutional 
aid. These principles address issues like expected contributions from 
noncustodial parents, treatment of depreciation expense which may 
reduce a parent's income, evaluation of rental properties, and 
unusually high medical expenses. Common treatment of these types of 
issues makes sense and, to my knowledge, there are no complaints about 
the existing exemption. H.R. 1866 would make the exemption passed in 
1994 permanent. It would not make any change to the substance of the 
exemption.
  The need-based financial aid system serves social goals that the 
antitrust laws do not adequately address, namely making financial aid 
available to the broadest number of students solely on the basis of 
demonstrated need. Without it the schools would be required to compete, 
through financial aid awards, for the very top students. Those very top 
students would get all of the aid available, which would be more than 
they need. The rest would get less or none at all. Ultimately such a 
system would serve to undermine the principles of need-based aid and 
need-blinded missions.
  No student who is otherwise qualified ought to be denied the 
opportunity to go to one of the Nation's most prestigious schools 
because of the limited financial institution of his or her family. H.R. 
1866 will help protect need-based aid and need-blinded missions and 
preserve that opportunity.
  Mr. Speaker, I urge the House to suspend the rules and pass this 
bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as 
I may consume.
  Mr. Speaker, I express my appreciation to the gentleman from Texas 
[Mr. Smith]. I think this is a mistake on the part of the Justice 
Department, and I am glad that Congress is appropriately stepping in to 
let universities do as they think best with the funds they have. We 
should note that this is twice today that we have legislated to say 
that antitrust rules should not be used in effect to interfere with 
charity. We did it earlier on the annuity question. Universities that 
are trying to maximize the extent to which they can help people go to 
school who could not otherwise afford it deserve a lot of credit.
  Mr. Speaker, I admire the willingness of the universities to 
persevere. I want to particularly say the Massachusetts Institute of 
Technology it seems to me showed a good deal of courage in this whole 
incident by not simply bucking under when they were sued. All the 
universities here, we should understand, the ones involved are fighting 
on behalf of themselves and other universities for the right to try to 
address the economic problems of people who could not afford to go to 
these schools. This is an effort by them to maximize the extent to 
which they give scholarship aid to people who genuinely need it and for 
whom it would be a necessity in going to school. They deserve credit 
for that. What they basically said is they will take on this fight and 
come to Congress for the right to be charitable in the best sense. So I 
am glad we are acting.
  Mr. Speaker, I appreciate the leadership that the gentleman from 
Texas [Mr. Smith], a member of the majority took, in making sure we 
could bring this forward. I am delighted this is going forward now.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. CONYERS. Mr. Speaker, I want to commend Mr. Smith and Mr. Frank 
for their diligent work in bringing this bill to our attention. H.R. 
1866 simply makes permanent a limited antitrust exemption for 
educational institutions.
  Congress acted to provide the exemption after court decisions in 1991 
and 1994 found that Ivy League schools who were sharing aid information 
concerning applicants were violating the antitrust laws. The 1994 law 
is scheduled to expire on September 30 of this year unless Congress 
first acts to extend it.
  Under the terms of the current antitrust exemption, universities are 
permitted to develop common aid forms and exchange student financial 
data through a third party so long as they agree to admit students on a 
need-blind basis. This means that participating schools are able to 
make maximum use of their available funds and ensure that the largest 
number of students are able to receive some form of aid. The law 
specifically prohibits schools from comparing the amount or terms of 
specific aid offers made to students.
  The 1994 law has worked well. Because of the law, financial aid 
officers have been able to develop a common set of principles for 
awarding aid and a common aid form. This has simplified the financial 
aid procedures for both students and their families as well as the 
colleges. In part, as a result, last year colleges and universities 
provided an estimated $8.6 billion in grants from their own funds, or 
30 percent more than the $6.6 billion in aid provided by the Federal 
Government. This aid is absolutely vital at a time of ever diminishing 
Federal resources.
  The exemption is narrowly drafted--allowing antitrust enforcers to 
pursue anticompetitive conduct while protecting socially beneficial 
activities by colleges--and deserves to be made permanent. I understand 
that the Justice Department has expressed no concerns with the bill, 
and I urge the Members to join me in supporting this well-intended 
legislation.
  Mr. SMITH of Texas. Mr. Speaker, I thank the gentleman from 
Massachusetts [Mr. Frank], for his generous comments.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  The SPEAKER pro tempore (Mr. Petri). The question is on the motion 
offered by the gentleman from Texas [Mr. Smith] that the House suspend 
the rules and pass the bill, H.R. 1866.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________