The Bidding Games Have Begun...

In 1991, the Justice Department descended in full force on the supposedly benign world of college admissions, bringing changes that reshaped the cost of higher education.

For decades, a group of 23 Ivy League universities and competitive colleges known as the "overlap group" met to discuss admissions and financial aid each spring at Wellesley, but the Justice Department charged that these meetings constituted a conspiracy to shield college tuition from competitive pressures.

"This collegiate cartel has denied [families] the right to compare prices and discounts among schools, just as they would in shopping for any other service or commodity," said then-Attorney General Richard Thornburgh.

The overlap schools settled with the Justice Department and eight years later, they continue not to speak to each other about specific financial aid offers.

Ivy League financial aid has not been the same.

"I think there are bidding wars," says Marlyn McGrath Lewis '70-'73, director of admissions. for Harvard and Radcliffe.

B. Ann Wright, an expert in admissions and financial aid and now a vice president at Smith College, goes further, calling the situation "chaotic."

"Students now get wildly different financial aid evaluations from different colleges," she says.

The overlap schools can now only discuss information in the public domain, she says, and are "really paranoid," bringing attorneys to meetings.

The agreement does contain exemptions to discuss certain principles. The Ivy League schools, for example, have a uniform policy of no athletic scholarships.

Still, admissions and financial aid policies have fallen victim to what Harvard Financial Aid Director James S. Miller calls a "chilling effect," adding that the policies of each school have developed "in isolation like the platypus in Australia," without the benefit of communication and collaboration.

"I regret the loss of opportunity to exchange ideas and philosophies," Miller says.

But while admissions and financial aid officers seem to have lost some of their control over their market, students may have benefited from the situation.

"Students have more leverage," Miller says. "There is more pressure to respond to aid changes [at other schools]."

Students who receive a higher aid package from one school than another can use the higher offer as a bargaining chip, threatening to attend the more generous school.

Wright criticizes such thinking on the part of students, however, calling financial aid offers the wrong reason to choose a college.

Over the last year and a half, Harvard and virtually all its peers embarked on major financial aid initiatives, raising levels of aid.

Miller says the end of overlap was not the sole reason for the wave of changes. Endowment growth and a national belief that college costs excessively burdened the middle class helped push the overhauls.

Top administrators, however, did acknowledge that competitive pressures helped bring the changes at the University, and the overlap arrangement would have helped curb that competitive pressure.

"There's no question the institutional changes made by Yale Stanford, Princeton and MIT made a shift in the landscape," said President Neil L. Rudenstine.

But according to Lewis, Harvard can avoid bidding wars to a large extent because of its aggressive and strategic use of financial aid.

"We have two tools," she says, referring to need-blind admissions and need-based aid.

In meeting all demonstrated need, the University hopes it can undercut competitive offers at other schools.

"We've been pleased with the success we've had," she says.

Harvard does not seem to have suffered since the end of overlap. Its yield percentage, the percent of students who ultimately decide to accept admissions offers, remains far and away the highest in the country.

Even from the University's point of view, the overlap group was not entirely helpful. Miller says that for admissions and financial aid officers at Harvard, the process was very time-consuming, though ultimately helpful.

He denies, however, that the overlap group inhibited Harvard's ability to act independently, without the approval of the other overlap members.

"We always did what we wanted to anyway," Miller says.

But, in fact, the overlap schools are still far from independent.

Most members of the overlap group, including Harvard, are also members of the Consortium for Financing Higher Education (COFHE), a Cambridge-based research organization of 31 colleges and universities.

COFHE looks at student debt levels and expectations of their college experiences, based on various surveys.

It also conducts an annual survey of first-year financial aid data, and publishes a biannual report.

While many of the results of the survey are not public information, the member schools are all privy to COFHE's findings.

"We don't talk about individual students," says Theodore Bracken, director of federal relations for COFHE. "But we try to track what's happening."

The member schools exchange data on tuition levels, student budget levels, the percentages of students on financial aid, average self help amounts, yield rates, application numbers and sources of grant aid for each of the member schools.

"It is a convenient way to assess where they are in relation to their competition and to make their own judgements about what, if anything, to do about that," Bracken says.

He stresses, however, that all data is "historical," meaning the schools only learn what each has already done, not what it will do in the next year, as was the case with overlap.

"It hasn't replaced the overlap group," Miller says, "but it does give you insight. You certainly can look at large trends."

Not only does COFHE give Harvard a sense of what its peers are up to, but the University uses the same formula for determining aid as hundreds of other schools in the nation.

Miller calls the Institutional Methodology (IM), a formula maintained by the College Board in Princeton, N.J., the "foundation" of need determination at Harvard.

Like the majority of the 400 schools who use the IM, Harvard does not base its decisions entirely on the calculations of the formula, but chooses to custom tailor award packages to individual family circumstances.

Nonetheless, the overlap schools subscribe to a common need formula, which accounts for the backbone of their financial aid policies. And since most of these schools are close to need-blind and strive to meet all demonstrated need, they are still able to achieve some degree of uniformity in their financial aid programs.

From Miller's point of view, this is hardly consolation, since he is deprived of the opportunity to "pick the brains of 25 people who do what I do."

The Justice Department pursued the overlap group under the Bush administration and, with a Clinton Justice Department, the schools might try to challenge the ban on collaboration.

But Miller says the current arrangement, for better or worse, is here to stay.

"I don't think anyone believes the Justice Department would allow us to reconstitute," he says.