The Return of Overlap?

Many of you have already heard of Cornell’s new competitive financial aid, which will match parental contribution and loan levels offered to admitted students by the other seven Ivies plus Duke, MIT, and Stanford:

Cornell University has an across-the-board aid policy that doesn’t come close to Harvard’s (just as its endowment doesn’t come close). Loans aren’t eliminated for everyone — just those with family incomes up to $75,000. For other students, there are loans (although there are caps of $3,000 a year for those with family income up to $120,000). But for those admitted to enroll in the fall of 2011 who are also admitted to Harvard, Cornell will match the parental contribution and loan levels of Harvard. And it will do the same for all other Ivies (a few of which are similar to Harvard and a few of which have policies somewhere in between those of Cornell and Harvard). Cornell also says it will “strive” to do the same for those also admitted to Duke and Stanford Universities and to Massachusetts Institute of Technology.

But will this policy bring another lawsuit like the DOJ suit against the Overlap Group in the early 1990’s? This group (Ivy+MIT) met at the end of each admissions cycle to review and normalize the financial aid packages of commonly admitted students. The DOJ determined that this practice took away students’ rights to review competing financial aid packages, and the Group was soon ended.

The only difference in this case is that the policy is unilateral. That is, it is being undertaken by individual universities (Cornell and Dartmouth in the Ivy League), and there is no “agreement to restrict trade,” in the language of antitrust law. Nevertheless, I think this policy will come under major scrutiny if it becomes adopted by more top national universities.