Officials Try To 'Sort Out' New Aid Law '

Harvard lawyers and financial aid officials are scrambling to define a provision in a newly enacted law that could have an important impact on students applying for financial aid.

The provision, part of the Higher Education Reauthorization Act signed last week by President Bush, allows universities to "discuss and voluntarily adopt defined principles of professional judgment for determining student financial need."

The Ivy League institutions had been banned from such discussions under the terms of a consent decree signed last fall in response to a Justice Department law suit accusing the colleges of violating anti-trust laws.

University lawyers and financial aid officials are now at work interpreting the phrase "defined principles of professional judgment."

"We're in the process of sorting this out," said Elizabeth M. Hicks, assistant dean of admissions and financial aid for federal and special programs. "We have... our lawyers looking at that."

Hicks said that according to her initial interpretation of the new law, "erring on the side of caution," the universities could agree to consider the home equity of an applicant's parents in determining financial need. But she said the new law would not allow her to share with Princeton or Brown, for instance, Harvard's exact formulas for treating home equity.

Still, that analysis may change as the legal interpretation of the act evolves, Hicks said.

Other experts on financial aid law said yesterday that such sharing of exact formulas would be permitted under the act.

For now, higher education officials are emphasizing the way the act enables them to agree that financial aid should be need-based.

"The important thing here is the enunciation of the general principle," said Hank Dullea, vice-president for university relations at Cornell University,

But the general principle that the JusticeDepartment supported--that students applying toIvy League institutions should have the benefitsof price competition--might fall by the wayside ifthe colleges interpret the new law to allow themto agree on specific formulas to determinefinancial aid awards.

A Democratic Congressional staffer who workedon the Act acknowledged the "possibility" that thecolleges could agree on detailed for mulas andprinciples that would have the same price-fixingeffect as the old "overlap" system, whererepresentatives of the institutions met todetermine financial aid awards.

But the staffer, who spoke on the condition onanonymity, said he thinks the complexity ofawarding financial aid makes it impossible toeliminate price competition without meeting aboutspecific cases.

"If they could have done it before, they wouldhave," the staffer said.

Others interviewed said the way the new lawwill affect financial aid will depend on thecomplexity of in dividual cases.

The Senate staffer said he expects universitiesto tread carefully on this, remembering that theywere "very embarrassed by the Justice Departmentsuit."

University Attorney Robert B. Donin, whohandles overlap issues for Harvard, said "The lawis only one week old and financial aid officersare still working out the details of how it is tobe implemented."

More Federal Money

Hicks said the act has many other effects onfinancial aid. The act's expansion of federalguaranteed student loans programs may increaseannual borrowing by all Harvard students under theprograms by as much as $10 million. StudentsUniversity-wide already borrow about $40 million ayear under the programs, Hicks said.

Hicks also said Harvard plans to apply to beone of the schools in a "direct lending" pilotprogram that would allow universities to replacebanks as lending agents for student loans.

Hicks said the direct lending program will makeapplying for student loans less confusing

But the general principle that the JusticeDepartment supported--that students applying toIvy League institutions should have the benefitsof price competition--might fall by the wayside ifthe colleges interpret the new law to allow themto agree on specific formulas to determinefinancial aid awards.

A Democratic Congressional staffer who workedon the Act acknowledged the "possibility" that thecolleges could agree on detailed for mulas andprinciples that would have the same price-fixingeffect as the old "overlap" system, whererepresentatives of the institutions met todetermine financial aid awards.

But the staffer, who spoke on the condition onanonymity, said he thinks the complexity ofawarding financial aid makes it impossible toeliminate price competition without meeting aboutspecific cases.

"If they could have done it before, they wouldhave," the staffer said.

Others interviewed said the way the new lawwill affect financial aid will depend on thecomplexity of in dividual cases.

The Senate staffer said he expects universitiesto tread carefully on this, remembering that theywere "very embarrassed by the Justice Departmentsuit."

University Attorney Robert B. Donin, whohandles overlap issues for Harvard, said "The lawis only one week old and financial aid officersare still working out the details of how it is tobe implemented."

More Federal Money

Hicks said the act has many other effects onfinancial aid. The act's expansion of federalguaranteed student loans programs may increaseannual borrowing by all Harvard students under theprograms by as much as $10 million. StudentsUniversity-wide already borrow about $40 million ayear under the programs, Hicks said.

Hicks also said Harvard plans to apply to beone of the schools in a "direct lending" pilotprogram that would allow universities to replacebanks as lending agents for student loans.

Hicks said the direct lending program will makeapplying for student loans less confusing