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Public Statements

Need-Based Educational Aid Act Of 2007

Floor Speech

Location: Washington, DC

NEED-BASED EDUCATIONAL AID ACT OF 2007 -- (Extensions of Remarks - March 30, 2007)

* Mr. SMITH of Texas. Madam Speaker, today I am pleased to join the gentleman from Massachusetts, Mr. DELAHUNT in introducing the ``Need-Based Educational Aid Act of 2007.''

* 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. From the 1950s to the late 1980s, the practice continued uncontested.

* In 1989, the Antitrust Division of the Department of Justice brought suit against 9 of the colleges that engaged in this practice. 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 of 1992. That temporary exemption codified the settlement and allowed agreements to provide aid on the basis of need only, to use common criteria, to use a common financial aid application form, and to allow the exchange of students' financial information through a third party. It also prohibited agreements on awards to specific students.

* In 1994, Congress extended this exemption as part of the Improving America's Schools Act. Congress has extended the exemption twice since 1994--in 1997 and 2001. As of May 2006, twenty-eight schools utilized this antitrust exemption. This exemption expires on September 30, 2008.

* I believe the current exemption makes sense, and to my knowledge there have been no complaints about it. A recent GAO study of the exemption found there has been no abuse of the exemption and stated that there has not been an increase in the price of college as a result of the exemption. The Antitrust Modernization Commission, which is due to release its final report next week, 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.

* 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 these schools because of the limited financial means of his or her family. This bill helps protect need-based aid and need-blind admissions.

* The last time a permanent extension of this antitrust exemption was considered by the House it passed by a vote of 414 to 0. I urge my colleagues to support this bill as well.

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