October 2, 1991

From The Chronicle of Higher Education

This essay was written in response to news reports that a group of colleges known as the Overlap Group were required by The U.S. Department of Justice to stop the practice of establishing together the amount financial aid that would be offered to students who sought admission to two or more of the colleges in the group. The essay is available online to Chronicle subscribers only by clicking here: Now the Overlap Group Must Compete – Archives – The Chronicle of Higher Education.

Now the Overlap Group Must Compete

By Philip G. Benoit

The colleges and universities in the Overlap Group recently went through a normal admissions year. Members of this group of 23 prestigious colleges now are obliged by their agreement with the Justice Department to award financial aid the way in which everyone else does. Their financial-aid officials no longer are permitted to assemble to agree on how much aid they will offer to students who have applied to more than one of the institutions.

Complaints are being heard about how inconvenient things have become for these institutions and the students seeking assistance. Apparently in numerous instances, aid offers for individual students varied widely from one institution in the group to another this year. Some students expressed frustration as they struggled with decisions about whether to stick with a first-choice institution or whether to enroll in one that offered a better aid package. Some students tried to negotiate with their first-choice institutions to extract better awards if their second choice offered them more aid.

In the days before the Justice Department nixed the practice, members of the Overlap Group could work out their aid packages free from the prospect that their applicants would be in a position to compare the package offered by university X with the one offered by college Y. Students applying to more than one member of the group could be dealt with easily by these institutions, because the colleges simply agreed among themselves on what to offer each student.

One parent whose son was admitted to an Ivy League university in the “old era” told me that he had attempted to bargain with the institution by pointing out how much aid his son was offered by another college that was not a member of Overlap. The institution, he said, responded that he should be satisfied that his son was even admitted to the college and that he could either take the package as offered, or leave it.

That kind of cavalier attitude involved minimal risk for the institution when the only competing offers came from colleges outside the prestigious Overlap Group. It was generally accurate to assume that the prospect of attending a prestigious institution would outweigh the benefits of a better package from a less prestigious one.

That situation has changed. The institutions that once composed the Overlap Group now have real reason to fear that a top student will be attracted to a competing institution offering a better financial-aid package.

As long as the institutions in the Overlap Group could compare notes, cost played no role in selecting among them. Indeed, the expressed intention for the collaboration on aid packages was to eliminate cost as a factor for students to use in choosing among the Overlap institutions. The assumption that this was a benefit to applicants is coloring the concerns now being expressed. The new procedures, it has been suggested, have inconvenienced students, some of whom enrolled in colleges that were not their first choice but which offered them more aid. Other students are held to be inconvenienced because they felt compelled to negotiate with institutions to try to get more aid.

The Chronicle reported recently on a student who wanted to go to the Massachusetts Institute of Technology but opted for Yale University because it offered her more financial aid. This was presented as an unfortunate consequence of the Justice Department’s interference in the old procedures.

CONSIDERING the probable scenario under the old system, however, where does the disadvantage lie? The student who chose to attend Yale may have been disappointed not to attend her first choice, but was it really a disadvantage to her to be given additional factors upon which to base her decision? If MIT had been a strong-enough first choice, the higher cost presumably would not have swayed her from attending MIT anyway. If she had, she would have paid more than she will now pay at Yale. But under the old system, Yale would have offered her the same package as MIT. So if she had opted for MIT, she never would have had the opportunity to save thousands of dollars.

It is difficult to understand how she would have benefited under the old system by going off to MIT blithely unaware that the collaboration of the Overlap Group had cost her and her family those thousands of dollars.

Any advantage under the old system probably accrued to the colleges rather than to the students they purported to be concerned with. By agreeing not to compete among themselves on the basis of price, the institutions had the opportunity to save substantial sums of money by pegging family contributions at the highest possible levels.

No, it is not the students who lost when the Justice Department stepped in. It is the institutions. Now they not only have to do a more thorough job of evaluating applicants’ financial situation, but they also have to consider the fact that other equally prestigious colleges may make better offers.

The old procedures reduced competition and costs for these institutions through a system that offered a tempting opportunity to lower aid awards to the disadvantage of students and their families. This was then sold as an attempt to help ease the anxiety of the students involved.

Students should understand that even the lowest aid offers they receive under the new system may be better than what they would have been offered under the old procedures. They also should understand that the chance to negotiate to get an improvement in their packages was never even an option before.

Vast differences in the amount of aid offered by different colleges should be resolved by developing more precise formulas to determine students’ need, not by defending a practice that offered institutions advantages while exploiting students and their families.

Philip G. Benoit is director of communications at Dickinson College in Carlisle, Pa.