[House Report 114-224]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 114-224
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NEED-BASED EDUCATIONAL AID ACT OF 2015
_______
July 23, 2015.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Goodlatte, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 2604]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 2604) to improve and reauthorize provisions relating
to the application of the antitrust laws to the award of need-
based educational aid, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 4
Congressional Budget Office Cost Estimate........................ 4
Duplication of Federal Programs.................................. 5
Disclosure of Directed Rule Makings.............................. 5
Performance Goals and Objectives................................. 5
Advisory on Earmarks............................................. 5
Section-by-Section Analysis...................................... 5
Changes in Existing Law Made by the Bill, as Reported............ 5
Purpose and Summary
H.R. 2604, the ``Need-Based Educational Aid Act of 2015,''
would extend for an additional 7 years an expiring exemption to
the antitrust laws, contained in section 568 of the ``Improving
America's Schools Act of 1994'', that permits colleges and
universities to collaborate on certain financial aid practices.
The existing antitrust exemption was created in 1992, has been
extended on four separate occasions, and is currently set to
expire on September 30, 2015. H.R. 2604 narrows the existing
antitrust exemption and extends its expiration to September 30,
2022.
Background and Need for the Legislation
A. GENESIS OF THE ANTITRUST EXEMPTION
Beginning in the mid-1950's, a number of private colleges
and universities agreed to award institutional financial aid
(i.e., 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. From
the 1950's through the late 1980's, this practice continued
undisturbed. In 1991, the Antitrust Division of the Department
of Justice (DOJ) brought suit against nine colleges and
universities to enjoin this practice.\1\ In 1991, eight of the
schools entered into a consent decree with DOJ.\2\ One of the
schools, the Massachusetts Institute of Technology, litigated
the issue for some time before ultimately entering into a
separate consent decree with DOJ.
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\1\See United States v. Brown Univ., 5 F.3d 658, 663-664 (3d Cir.
1993) (discussing the relevant DOJ litigation history).
\2\Id.
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In 1992, Congress passed a temporary antitrust exemption
authorizing schools to agree to award financial aid on a need-
blind basis and to use common principles of need analysis when
determining private financial aid awards.\3\ This temporary
exemption specifically prohibited any agreement as to the terms
of a financial aid award to any specific student. By its terms,
it expired on September 30, 1994.
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\3\Higher Education Amendments of 1992, Sec. 1544, Pub. L. No. 102-
325 (1992).
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In 1994, Congress passed another temporary exemption from
the antitrust laws.\4\ This exemption resembled the one passed
in 1992, in that it allowed agreements to provide aid on the
basis of need only and to use common principles of need
analysis. It also prohibited agreements on awards to specific
students. Unlike the 1992 exemption, however, it also allowed
the use of a common aid application form and the exchange of
the student's financial information through a third party. The
law was modeled after the consent decrees entered into between
DOJ and the nine universities and colleges. The temporary
exemption was set to expire on September 30, 1997. In 1997,
Congress passed a law further extending the exemption until
September 30, 2001, as attempts to make the exemption permanent
were unsuccessful.\5\ The exemption was extended again in 2001
and 2008.\6\
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\4\Improving America's Schools Act of 1994, Sec. 568, Pub. L. No.
103-382 (1994).
\5\Need-Based Educational Aid Antitrust Protection Act of 1997,
Pub. L. No. 105-43 (1997).
\6\Need-Based Educational Aid Act of 2001, Pub. L. No. 107-72
(2001); Need-Based Educational Aid Act of 2008, Pub. L. No. 110-327
(2008).
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Under the existing antitrust exemption, colleges and
universities can engage in the following joint practices:
1. Lagreeing to award financial aid only on the basis
of demonstrated financial need;
2. Lusing common principles of analysis for determining
financial need;
3. Lusing a common aid application form; and
4. Lexchanging, through an independent third party,
financial information submitted by students and their
families.
Schools and universities are not required to participate
jointly in these activities, and only do so on a voluntary
basis. Indeed, only a select number of schools utilize the
existing antitrust exemption.\7\ Furthermore, the common set of
principles reached by the participating schools is not binding
on those that participate, nor are there prescribed financial
aid amounts that are predetermined. Indeed, universities using
the common formula offer different, and competitive, financial
aid packages to the same student.
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\7\The universities and colleges that currently utilize the
exemption are: Amherst College; Boston College; Claremont McKenna
College; College of the Holy Cross; Columbia University; Cornell
University; Dartmouth College; Davidson College; Duke University;
Georgetown University; Grinnell College; Haverford College;
Massachusetts Institute of Technology; Middlebury College; Northwestern
University; Pomona College; St. John's College; Swarthmore College;
University of Notre Dame; University of Pennsylvania; Vanderbilt
University; Wellesley College; and, Williams College.
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Notably, when Congress extended the antitrust exemption in
2001, the relevant legislation included a requirement that the
Government Accountability Office (GAO) issue a report
determining whether the antitrust exemption impacted the
affordability of the colleges and universities. In 2006, GAO
published a report finding that the antitrust exemption did not
adversely impact the affordability of colleges and
universities.\8\
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\8\See U.S. Gov't Accountability Office, Schools' Use of the
Antitrust Exemption Has Not Significantly Affected College
Affordability or Likelihood of Student Enrollment to Date (2006).
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B. H.R. 2604, THE ``NEED-BASED EDUCATIONAL AID ACT OF 2015''
As a result of the continued need by certain schools to
utilize the antitrust exemption for joint collaboration on
certain financial aid practices, Rep. Lamar Smith (R-TX) and
Rep. Henry C. ``Hank'' Johnson, Jr. (D-GA) introduced H.R.
2604. The legislation recognizes that schools have not utilized
the component of the existing antitrust exemption that allows
them to share students' financial information through an
independent third party. Accordingly, H.R. 2604 allows that
provision of the existing exemption to expire, and only extends
provisions for the three other activities for an additional 7
years.
Hearings
The Committee did not hold any hearings on H.R. 2604.
Committee Consideration
On July 8, 2015, the Committee met in open session and
ordered the bill, H.R. 2604, favorably reported, without
amendment, by a voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 2604.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 2604, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 15, 2015.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2604, the ``Need-
Based Educational Aid Act of 2015.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Marin
Burnett, who can be reached at 226-2860.
Sincerely,
Keith Hall,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 2604--Need-Based Educational Aid Act of 2015.
As ordered reported by the House Committee on the Judiciary
on July 8, 2015.
H.R. 2604 would extend--until September 30, 2022--a
provision of current law that exempts institutions of higher
education from regulation under Federal antitrust laws when
awarding need-based student aid. Under current law, the
provision expires on September 30, 2015. With this extension,
colleges and universities would be able to continue to
collaborate, but CBO expects those activities would not affect
the workload of any Federal agency. Thus, CBO estimates that
implementing the bill would not have a significant effect on
the Federal budget.
H.R. 2604 would not affect direct spending or revenues;
therefore, pay-as-you-go procedures do not apply.
H.R. 2604 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The staff contact for this estimate is Marin Burnett. The
estimate was approved by Theresa Gullo, Assistant Director for
Budget Analysis.
Duplication of Federal Programs
No provision of H.R. 2604 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that H.R. 2604 specifically directs
to be completed no specific rule makings within the meaning of
5 U.S.C. 551.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
2604 improves and reauthorizes provisions relating to the
application of the antitrust laws to the award of need-based
educational aid.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 2604 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Section 1. Short Title. Provides that the bill may be
referred to as the ``Need-Based Educational Aid Act of 2015.''
Section 2. Amendments. Strikes the provision of section 568
of the ``Improving America's Schools Act of 1994'' that allows
for the exchange, through an independent third party, of
financial information submitted by students and their families,
and extends the remaining antitrust exemptions contained in
that section to September 30, 2022.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
IMPROVING AMERICA'S SCHOOLS ACT OF 1994
* * * * * * *
TITLE V--MISCELLANEOUS PROVISIONS
* * * * * * *
PART F--MISCELLANEOUS
* * * * * * *
SEC. 568. APPLICATION OF THE ANTITRUST LAWS TO AWARD OF NEED-BASED
EDUCATIONAL AID.
(a) Temporary Exemption.--It shall not be unlawful under the
antitrust laws for 2 or more institutions of higher education
at which all students admitted are admitted on a need-blind
basis, to agree or attempt to agree--
(1) to award such students financial aid only on the
basis of demonstrated financial need for such aid;
(2) to use common principles of analysis for
determining the need of such students for financial aid
if the agreement to use such principles does not
restrict financial aid officers at such institutions in
their exercising independent professional judgment with
respect to individual applicants for such financial
aid; or
(3) to use a common aid application form for need-
based financial aid for such students if the agreement
to use such form does not restrict such institutions in
their requesting from such students, or in their using,
data in addition to the data requested on such form[;
or].
[(4) to exchange through an independent third party,
before awarding need-based financial aid to any of such
students who is commonly admitted to the institutions
of higher education involved, data with respect to the
student so admitted and the student's family relating
to assets, income, expenses, the number of family
members, and the number of the student's siblings in
college, if each of such institutions is permitted to
retrieve such data only once with respect to the
student.]
(b) Limitations.--Subsection (a) shall not apply with respect
to--
(1) any financial aid or assistance authorized by the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.);
or
(2) any contract, combination, or conspiracy with
respect to the amount or terms of any prospective
financial aid award to a specific individual.
(c) Definitions.--For purposes of this section--
(1) the term ``alien'' has the meaning given such
term in section 101(3) of the Immigration and
Nationality Act (8 U.S.C. 1101(3));
(2) the term ``antitrust laws'' has the meaning given
such term in subsection (a) of the first section of the
Clayton Act (15 U.S.C. 12(a)), except that such term
includes section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section applies to
unfair methods of competition;
(3) the term ``institution of higher education'' has
the meaning given such term in section 1201(a) of the
Higher Education Act of 1965 (20 U.S.C. 1141(a));
(4) the term ``lawfully admitted for permanent
residence'' has the meaning given such term in section
101(20) of the Immigration and Nationality Act (8
U.S.C. 1101(20));
(5) the term ``national of the United States'' has
the meaning given such term in section 101(22) of the
Immigration and Nationality Act (8 U.S.C. 1101(22));
(6) the term ``on a need-blind basis'' means without
regard to the financial circumstances of the student
involved or the student's family; and
(7) the term ``student'' means, with respect to an
institution of higher education, a national of the
United States or an alien admitted for permanent
residence who is admitted to attend an undergraduate
program at such institution on a full-time basis.
(d) Expiration.--Subsection (a) shall expire on September 30,
[2015] 2022.
(e) Related Amendments.--The Higher Education Amendments of
1992 (Public Law 102-325) is amended--
(1) in the table of contents by striking the matter
relating to section 1544, and part F of title XV, of
such Act; and
(2) by striking part F of title XV of such Act.
* * * * * * *
[all]