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Public Statements

Need-Based Educational Aid Act of 2008

By:
Date:
Location: Washington, DC


NEED-BASED EDUCATIONAL AID ACT OF 2008 -- (House of Representatives - April 30, 2008)

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Mr. SMITH of Texas. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, first of all, I am glad we are considering this timely legislation tonight, H.R. 1777, the Need-Based Educational Aid Act of 2008. I also want to thank the gentleman from Massachusetts (Mr. Delahunt) for his tireless efforts in promoting this legislation, and also for his leadership, because if it were not for his leadership, we would not be here tonight considering this important bill. It was good working with him and I appreciate the success that he has had in getting us to this point. This issue has long been of interest to me personally as well. I also sponsored the bill that extended the exemption in 1997 and 2001.

Beginning in the mid-1950s, a number of private colleges and universities agreed to award financial aid solely on the basis of demonstrated need. These schools also agreed to use common criteria to assess each student's financial need and to give the same financial aid award to students admitted to more than one member of that group of schools. In the 1950s to the late 1980s, the practice continued.

In 1989, the Antitrust Division of the Department of Justice brought suit against nine of the colleges. After extensive litigation, the parties entered into a consent decree in 1991 that all but ended the practice. In 1992, Congress passed the first exemption to the antitrust laws for these colleges as part of the Higher Education Amendments. That temporary exemption codified the settlement and allowed colleges to provide aid on the basis of need only, to use common criteria to determine need, to use a common financial aid application form, and to allow the exchange of the student's financial information through a third party.

In 1994, Congress extended this exemption as section 568 of the Improving America's Schools Act. Congress has extended the exemption twice since 1994, in 1997 and 2001. Twenty-seven schools currently are members of the so-called Presidents' Group which utilizes this antitrust exemption. Several other colleges, including Yale and Harvard, participate as advisory members of the group. This exemption expires on September 30, 2008.

Common treatment of these types of issues makes sense and, to my knowledge, there are no complaints about the existing exemption. In fact, a recent GAO study of the exemption found that there had been no abuse of the exemption and stated that there had not been an increase in the cost of tuition as a result of the exemption. The Antitrust Modernization Commission studied this exemption and found that it provides ``limited immunity for limited conduct.'' That is, it is narrowly tailored to meet its goals of promoting access to need-based financial aid.

This bill would make the exemption passed in 1992, 1994, 1997, and 2001 permanent. It would not make any change to the substance of the exemption itself. The need-based financial aid system serves worthy goals that the antitrust laws do not adequately address, namely, making financial aid available to the broadest number of students solely on the basis of demonstrated need. No student who is otherwise qualified should be denied the opportunity to go to one of the colleges involved because of the limited financial means of his or her family. This bill helps protect need-based aid and need-blind admissions.

Mr. Speaker, the last time the House considered a permanent extension of this antitrust exemption, it passed by a vote of 414-0. The bill is supported by the American Association of Community Colleges, the American Association of State Colleges and Universities, the American Council on Education, the Association of American Universities, the National Association for Independent Colleges and Universities, the National Association of State Universities and Land-Grant Colleges, and the Presidents' Group. I urge my colleagues to support this bill as well.

Finally, Mr. Speaker, I want to again thank Mr. Delahunt for his work on this legislation and for getting us to the point where it is being considered tonight.

With that, I will yield back the balance of my time.

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