[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.
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