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In Wake of Federal Probe, ‘a Chilling Effect’ on Talk of Student-Aid Reform

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Tori Haring-Smith (Washington & Jefferson College)

The U.S. Department of Justice has ended its investigation of a handful of colleges whose presidents had discussed reforming their financial-aid policies. As the Web site Inside Higher Ed first reported on Thursday, the institutions received letters this week stating that the Justice Department had closed the investigation “without taking action.”

The federal inquiry was prompted by a January conference hosted by the Council of Independent Colleges. During a session titled “Collaborative Efforts on Student Aid and Admissions Policies,” some college leaders discussed how—or whether—they could limit their use of merit-based financial aid and reduce bidding wars for applicants.

In a May 21 letter to several presidents who had participated in that session, the Justice Department wrote that an agreement “to restrict tuition discounting and prevent colleges from changing or improving financial-aid awards to individual students” may restrain competition in violation of antitrust laws. As it turned out, there had been no agreement—just a wide-ranging dialogue. (Read my full story from June here and a follow-up post here.)

On Thursday I interviewed Tori Haring-Smith, president of Pennsylvania’s Washington & Jefferson College, which was among the institutions that the department investigated. Following is an edited transcript of our conversation.

Q. How would you describe what happened here?

A. I think what happened is the DOJ heard about a conversation at the CIC conference and misconstrued it, and I can understand why they misunderstood it, given the title of the session. The title implied somehow that we were at that moment going to agree to some kind of policy when, in fact, what we were doing was presenting ideas and asking, Should we work to expand the possibility for collaboration by lobbying the DOJ or the Congress? It was a discussion; nothing was agreed to.

Q. What’s your sense of how this investigation has affected presidents at other colleges?

A. The effect of this letter and the media attention have been to make presidents extremely cautious about any discussions of financial aid. A chilling effect. That’s an unfortunate ramification since our business model is closely related to our financial-aid model. And since we need to be talking about ways of making our business model more efficient, this has broader implications. It’s not just about financial aid.

Q. It seems that the public, not to mention many people in higher education, see colleges as competitors, locked in an endless battle for applicants, revenue, and prestige. Does this matter? Are colleges more than competitors? Should they be?

A. You’ve pointed to the core of the problem. We have operated in many ways as competitors, and if we are going to have any kind of dramatic effect on the business model, if we are going to address cost and affordability in any dramatic way, we are going to have to address this from a systemic point of view, and we’re going to have to collaborate. Not only are liberal-arts colleges like Washington & Jefferson going to have to cooperate with other liberal-arts colleges, but we’re going to have to cooperate with large flagship universities. It’s going to be an entirely new way of talking about education.

Q. You’ve done a lot of research on antitrust law and the possibility for greater cooperation among colleges. What got you interested in this issue in the first place?

A. I got into this issue when I began to look at the history of financial aid in this country, from the initial intention of financial aid and the gradual adoption of a system that provided not just merit aid to those who had need, but merit aid that was non-need-based. It grew out of a sense that we’ve lost our way.

Q. You’ve talked about the need for presidents to collectively lobby Congress to loosen antitrust restrictions on discussions of financial aid by expanding the existing exemption. What do you think presidents should be pushing lawmakers for?

A. We have to help them understand that the restrictions are tighter than they may be perceived to be, to understand that an ever-dwindling number of colleges can even have these conversations. And to offer suggestions for ways in which the restrictions could be usefully relaxed or redefined. The point is we are working for the common good. … There are industries that continue to compete and collaborate simultaneously. Think of automobile companies and emissions control. They have to find a common ground on those policies even as they preserve their proprietary interests. We have to have some kind of conversation about how financial aid could and should be apportioned.

Q. How do you think that discussion would help the public?

A. There’s no question that financial-aid resources could be deployed more efficiently and effectively, and that these conversations are necessary to be able to craft a better set of policies and procedures. Basically, we have had 50 years of progressive rhetoric calling for affordability and access, and increasingly regressive action as more and more money has gone, and a greater percentage of money has gone, to non-need-based aid.

Q. Now that the investigation is over, how do you feel?

A. I feel relieved and assured. I really believed that the DOJ would discover what really happened and that it was not grounds for concern. But when police are following you on the highway, and you know you are going the speed limit, you’re still concerned. And you’re very relieved, but not surprised, when they pass.

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