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UNITED STATES v. BROWN UNIV. IN PROVIDENCE IN RHOD

September 2, 1992

UNITED STATES OF AMERICA
v.
BROWN UNIVERSITY IN PROVIDENCE IN THE STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS; THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK; CORNELL UNIVERSITY; THE TRUSTEES OF DARTMOUTH COLLEGE; PRESIDENT AND FELLOWS OF HARVARD COLLEGE, MASSACHUSETTS; MASSACHUSETTS INSTITUTE OF TECHNOLOGY; THE TRUSTEES OF PRINCETON UNIVERSITY; THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA; and YALE UNIVERSITY



The opinion of the court was delivered by: LOUIS C. BECHTLE

 BECHTLE, CH. J.

 SEPTEMBER 2, 1992

 I. INTRODUCTION

 The United States brought the instant action after a two-year investigation of the financial aid programs of various colleges and universities across the country. In its one-count verified complaint, the government alleged that the above-captioned defendants unlawfully conspired to restrain trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1 (1990), by collectively determining the amount of financial assistance awarded to students. The court entered final judgment against all defendants, with their consent, except for Massachusetts Institute of Technology which decided to defend against the charges. After a non-jury trial, the court renders the following decision:

 II. FINDINGS OF FACT

 1. Defendant, Massachusetts Institute of Technology ("MIT"), is a non-profit institution of higher education. MIT is incorporated under the laws of Massachusetts.

 2. According to its charter, granted in 1861, MIT was incorporated:

 for the purpose of instituting and maintaining a society of arts, a museum of arts, and a school of industrial science, and aiding generally, by suitable means, the advancement, development and practical application of science in connection with arts, agriculture, manufactures and commerce . . . .

 3. MIT is governed by the MIT Corporation, over which the Chairman presides, and an Executive Committee. The MIT Corporation is comprised of 70 elected volunteer members, including distinguished leaders in science, engineering, industry, education and public service, and eight ex officio members. The Governor of Massachusetts, the Chief Justice of the Massachusetts Supreme Judicial Court, and the Massachusetts Commissioner of Education are all ex officio members of the MIT Corporation.

 5. MIT's operating budget is approximately $ 1.1 billion. MIT maintains an endowment of approximately $ 1.5 billion (which consistently ranks among the ten largest in the nation) and receives tuition payments and other income of approximately $ 158 million.

 6. MIT offers undergraduate and graduate programs. MIT's educational programs are provided through five schools, engineering, science, architecture and planning, management, and humanities and social science.

 7. Each year MIT receives several thousand applications, including many from students who are not Massachusetts residents, some of whom ultimately enroll at MIT. Many applications for admission are transported to MIT from other states. MIT receives money, including charitable donations and non-refundable application fees, from out-of-state residents.

 8. The Ivy League is an organization made up of eight institutions of higher education. The eight Ivy League schools are Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, Princeton University, the University of Pennsylvania, and Yale University.

 9. MIT and the Ivy League schools are included among the group of elite higher education institutions in the country. MIT and the Ivy League schools comprise the Ivy Overlap Group.

 10. MIT has also been an associate member of the Pentagonal/Sisters Overlap Group, which included the five "Pentagonal" schools (Amherst, Williams, Wesleyan, Bowdoin, and Dartmouth), the "Seven Sisters" schools (Barnard, Bryn Mawr, Mount Holyoke, Radcliffe, Smith, Vassar, and Wellesely) and four other schools (Colby, Middlebury, Trinity, and Tufts).

 MIT'S ADMISSION PRACTICES AND POLICIES

 11. Each year MIT receives between six and seven thousand applications from prospective students. Approximately 2,000 students are admitted, approximately 1,100 of whom ultimately enroll.

 12. In deciding whether to admit applicants, MIT evaluates the applicants' grades, class rank, performance on scholastic aptitude and achievement tests, the quality of their high school academic program, and personal accomplishments.

 13. MIT seeks to admit very able students. For example, in the 1991-92 academic year, 259 of the 880 MIT freshmen who had high school ranks were class valedictorians, and 83% were in the top 5% of their high school classes. Of that same MIT entering class, 50% had math SAT scores above 750 (out of a possible 800) and 80% had math scores over 700. The average math SAT score for the 1992-1993 freshmen class was 735.

 14. MIT's principal competitors for "high quality" undergraduate students are Harvard, Princeton, Stanford, and Yale.

 15. For the 1991-92 academic year, the undergraduate enrollment was approximately 4,400 students.

 16. MIT regularly conducts reply studies of its admitted students. In 1988, 82% of all students admitted to MIT attended MIT, another Ivy Overlap Group school, or Stanford. Eighty-eight percent of students admitted to MIT considered to be the "highest achievers" enrolled in these schools.

 17. MIT employs a "need-blind admissions" system. Under this system, all admission decisions are based entirely on an applicant's merit, without any regard to the applicant's financial circumstances or ability to pay.

 18. It is also MIT's policy to meet the full financial aid needs of attending students. When available resources do not meet students' financial need, MIT subsidizes the balance through additional assistance in the form of institutional grants.

 20. For the 1991-92 academic year, approximately 44% of the undergraduate enrollment were from American minority groups. By contrast, three decades ago, little more than 3% or 4% of MIT's undergraduate student body were from American minority groups.

 21. For the 1991-92 academic year, 57% of students attending MIT received financial aid from MIT.

 THE FINANCIAL AID PROCESS

 22. Under the federal financial aid program, students and their families are expected to use their combined assets in order to finance the student's college education. See 20 U.S.C. §§ 1078(a)(2) and 1087mm (1989).

 23. When family assets are insufficient to meet college expenses, the student becomes eligible for federal loans or loan guarantees. See 20 U.S.C. § 1078(a)(2), 1087kk and 1087mm.

 24. In order to qualify for federally funded financial aid, students and their families must disclose financial information by completing the College Scholarship Service's ("CSS") Financial Aid Form ("FAF").

 25. CSS is a branch of the College Board's Educational Testing Service. CSS functions as the principal processor for financial aid programs in the United States.

 26. CSS collects financial information from aid applicants, processes that information using a standardized formula, and distributes that information to participating institutions. More than 2,000 colleges and universities rely on CSS for processing financial aid data.

 27. The FAF solicits detailed information concerning the income and assets of financial aid applicants. This information includes the adjusted gross income of the student and his or her parents from the previous year's federal income tax return, the number of dependents, the number of family members enrolled in private elementary, secondary and post-secondary institutions, and the net assets of the student and the parents.

 28. CSS processes the information on the FAF and sends the data to the United States Department of Education, which makes the initial calculation of each aid applicant's expected "family contribution."

 29. The family contribution is the amount which the student and his or her family may be reasonably expected to contribute towards his or her educational expenses for one year. See 20 U.S.C. § 1087mm. The family contribution comprised of two parts: the parent contribution and the student contribution.

 30. The Department of Education sends its family contribution determination back to CSS. CSS then incorporates the data into its Financial Aid Form Needs Analysis Report ("FAFNAR"). CSS sends the FAFNAR to the applicant and each school to which the applicant has applied.

 31. Presently, the Department of Education determines family contribution by using the "Congressional Methodology," which is the needs analysis methodology required by the Higher Education Amendments of 1986 for the awarding of federally-funded or federally-guaranteed financial aid. See 20 U.S.C. § 1087nn, et seq.

 32. Federal financial aid policy aims to ensure that similarly situated students are treated the same regardless of which institution, or aid officer within that institution, reviews their applications, and that students with less financial need do not receive more aid than those students with more financial need.

 33. The Congressional Methodology became effective for the 1988-89 academic year. Prior to the enactment of the Congressional Methodology, CSS determined family contribution by applying the "Uniform Methodology," which was approved by the Department of Education as an acceptable methodology for distributing federal financial aid funds.

 34. Under the Congressional Methodology, a school may either increase or decrease the Department of Education's family contribution determination by that school's using its "professional judgment."

 35. A school is permitted to use its professional judgment when "special circumstances" exist. Professional judgment may be used on a case-by-case basis only; schools may not consider special circumstances that exist among a class of students. See 20 U.S.C. § 1087tt.

 36. Professional judgment could be used, for example, if an institution's financial aid officer concluded that there was a significant change in the financial condition of a family, or if the cost for room and board turned out to be higher than was previously estimated.

 37. Guidelines do not exist for the use of professional judgment. Various colleges may choose to apply professional judgment in different ways and under different circumstances. As a result, through the use of professional judgment, different schools may end up with divergent family contribution determinations with respect to the same applicant even though both schools used the Congressional Methodology.

 38. The Department of Education recommends that professional judgment be used sparingly.

 39. In addition to the information provided to CSS, individual schools may require applicants to provide additional financial information.

 40. MIT requires its applicants to complete the MIT Financial Aid Application and submit copies of the applicants' and their parents' latest federal tax returns. In cases where the applicants' parents are divorced or separated, MIT requires the completion of a Divorced/Separated Parent's Statement.

 41. MIT determines a student's "financial need" by subtracting its family contribution determination from the applicant's "student budget."

 42. The student budget includes tuition, room and board, and other expenses such as books, materials, and travel.

 43. MIT's current student budget is approximately $ 25,000.

 44. There are two types of financial aid: grants and self-help.

 45. Grants are financial assistance which the recipient is not required to repay.

 46. Self-help is assistance in the form of loans or school-year employment opportunities. Each institution maintains its own self-help "level," which is the minimum amount all students are expected to provide themselves. Awards of self-help alone satisfy the ...


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