Issue Briefs

Anti-Trust

NAICU has recommended to Congress that it consider providing a temporary anti-trust exemption for private, nonprofit colleges for purposes of promoting affordability. Such a provision could be for a limited time to ensure public affordability purposes are served through any exemption. (Promoting College Affordability: Proposal for Relief from Anti-Trust Restrictions)

NAICU also supports the current exemption in law, while recognizing its limited scope. This exemption provides relief on institutional need analysis principles, common aid applications, and exchange of financial aid data to need-blind institutions.

In forming its policy position, NAICU members face a particular challenge, because simply assessing the purpose and scope of an exemption can create the perception of violating anti-trust practice.

About

After a Justice Department investigation in the late 1980s, several universities signed a consent decree to stop certain collaborative aid packaging practices. The agreement left the question of whether anti-trust law applied to private, nonprofit colleges unanswered because it took the case out of the courts.

In 1994, Congress amended the law to provide some limited relief, which was most recently extended on August 6, 2015. The exceptions permitted are so restrictive as to render them inaccessible for most colleges.

More recently, leaders from some private colleges that do not qualify for the exemption discussed the possibility of seeking a change in the law permitting them to consider new financial aid policies that would increase aid for low-income students, or drop prices. Hearing of the discussions, the Justice Department launched a new investigation of those colleges. The investigation, which was short lived, has added complexity to the current affordability conversation.

In the spring of 2018, the Department of Justice launched a new anti-trust investigation focusing on early admissions practices at some private, nonprofit colleges.

History of Anti-Trust and Colleges

  • 1989 – Department of Justice (DOJ) opens anti-trust investigation of colleges.
  • 1991 – Eight Ivy League institutions sign a consent decree with DOJ. 
  • 1993 - DOJ settles the case against MIT.  
  • 1994 – Congress enacted limited relief for colleges (Sec. 568 of Improving America’s Schools Act)
  • 2006 – Government Accountability Office (GAO) issues report on colleges’ use of anti-trust exemption. *
  • 2008 – The Institute for College Access and Success (TICAS) issues paper calling for re-examination of institutional cooperation on financial aid.
  • 2012 – NAICU meets with DOJ officials to discuss their openness to reconsidering their position.
  • 2013 – A Council of Independent Colleges meeting session on need-based aid leads to a new DOJ investigation, which is launched – but subsequently closed.  NAICU recommends to Congress a new exemption for all private, nonprofit institutions.  
  • 2015 – Public Law 114-44 extends the Sec. 568 expiration date to September 30, 2022. This is one of several extensions of the section since its original enactment.
  • 2017 – NAICU updates its 2013 recommendations to provide a five-year anti-trust exemption for all private, nonprofit colleges and universities. 
  • 2018 - DOJ launches a new investigation of early admissions practices.

In the News

NAICU Washington Updates