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[House Report 114-224]
[From the U.S. Government Publishing Office]

114th Congress    }                                      {      Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                      {     114-224

======================================================================

 
                 NEED-BASED EDUCATIONAL AID ACT OF 2015

                                _______
                                

 July 23, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2604]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2604) to improve and reauthorize provisions relating 
to the application of the antitrust laws to the award of need-
based educational aid, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
New Budget Authority and Tax Expenditures........................     4
Congressional Budget Office Cost Estimate........................     4
Duplication of Federal Programs..................................     5
Disclosure of Directed Rule Makings..............................     5
Performance Goals and Objectives.................................     5
Advisory on Earmarks.............................................     5
Section-by-Section Analysis......................................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    H.R. 2604, the ``Need-Based Educational Aid Act of 2015,'' 
would extend for an additional 7 years an expiring exemption to 
the antitrust laws, contained in section 568 of the ``Improving 
America's Schools Act of 1994'', that permits colleges and 
universities to collaborate on certain financial aid practices. 
The existing antitrust exemption was created in 1992, has been 
extended on four separate occasions, and is currently set to 
expire on September 30, 2015. H.R. 2604 narrows the existing 
antitrust exemption and extends its expiration to September 30, 
2022.

                Background and Need for the Legislation

                 A. GENESIS OF THE ANTITRUST EXEMPTION

    Beginning in the mid-1950's, a number of private colleges 
and universities agreed to award institutional financial aid 
(i.e., aid from the school's own funds) solely on the basis of 
demonstrated financial need. These schools also agreed to use 
common principles to assess each student's financial need. From 
the 1950's through the late 1980's, this practice continued 
undisturbed. In 1991, the Antitrust Division of the Department 
of Justice (DOJ) brought suit against nine colleges and 
universities to enjoin this practice.\1\ In 1991, eight of the 
schools entered into a consent decree with DOJ.\2\ One of the 
schools, the Massachusetts Institute of Technology, litigated 
the issue for some time before ultimately entering into a 
separate consent decree with DOJ.
---------------------------------------------------------------------------
    \1\See United States v. Brown Univ., 5 F.3d 658, 663-664 (3d Cir. 
1993) (discussing the relevant DOJ litigation history).
    \2\Id.
---------------------------------------------------------------------------
    In 1992, Congress passed a temporary antitrust exemption 
authorizing schools to agree to award financial aid on a need-
blind basis and to use common principles of need analysis when 
determining private financial aid awards.\3\ This temporary 
exemption specifically prohibited any agreement as to the terms 
of a financial aid award to any specific student. By its terms, 
it expired on September 30, 1994.
---------------------------------------------------------------------------
    \3\Higher Education Amendments of 1992, Sec. 1544, Pub. L. No. 102-
325 (1992).
---------------------------------------------------------------------------
    In 1994, Congress passed another temporary exemption from 
the antitrust laws.\4\ This exemption resembled the one passed 
in 1992, in that it allowed agreements to provide aid on the 
basis of need only and to use common principles of need 
analysis. It also prohibited agreements on awards to specific 
students. Unlike the 1992 exemption, however, it also allowed 
the use of a common aid application form and the exchange of 
the student's financial information through a third party. The 
law was modeled after the consent decrees entered into between 
DOJ and the nine universities and colleges. The temporary 
exemption was set to expire on September 30, 1997. In 1997, 
Congress passed a law further extending the exemption until 
September 30, 2001, as attempts to make the exemption permanent 
were unsuccessful.\5\ The exemption was extended again in 2001 
and 2008.\6\
---------------------------------------------------------------------------
    \4\Improving America's Schools Act of 1994, Sec. 568, Pub. L. No. 
103-382 (1994).
    \5\Need-Based Educational Aid Antitrust Protection Act of 1997, 
Pub. L. No. 105-43 (1997).
    \6\Need-Based Educational Aid Act of 2001, Pub. L. No. 107-72 
(2001); Need-Based Educational Aid Act of 2008, Pub. L. No. 110-327 
(2008).
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    Under the existing antitrust exemption, colleges and 
universities can engage in the following joint practices:

        1. Lagreeing to award financial aid only on the basis 
        of demonstrated financial need;

        2. Lusing common principles of analysis for determining 
        financial need;

        3. Lusing a common aid application form; and

        4. Lexchanging, through an independent third party, 
        financial information submitted by students and their 
        families.

Schools and universities are not required to participate 
jointly in these activities, and only do so on a voluntary 
basis. Indeed, only a select number of schools utilize the 
existing antitrust exemption.\7\ Furthermore, the common set of 
principles reached by the participating schools is not binding 
on those that participate, nor are there prescribed financial 
aid amounts that are predetermined. Indeed, universities using 
the common formula offer different, and competitive, financial 
aid packages to the same student.
---------------------------------------------------------------------------
    \7\The universities and colleges that currently utilize the 
exemption are: Amherst College; Boston College; Claremont McKenna 
College; College of the Holy Cross; Columbia University; Cornell 
University; Dartmouth College; Davidson College; Duke University; 
Georgetown University; Grinnell College; Haverford College; 
Massachusetts Institute of Technology; Middlebury College; Northwestern 
University; Pomona College; St. John's College; Swarthmore College; 
University of Notre Dame; University of Pennsylvania; Vanderbilt 
University; Wellesley College; and, Williams College.
---------------------------------------------------------------------------
    Notably, when Congress extended the antitrust exemption in 
2001, the relevant legislation included a requirement that the 
Government Accountability Office (GAO) issue a report 
determining whether the antitrust exemption impacted the 
affordability of the colleges and universities. In 2006, GAO 
published a report finding that the antitrust exemption did not 
adversely impact the affordability of colleges and 
universities.\8\
---------------------------------------------------------------------------
    \8\See U.S. Gov't Accountability Office, Schools' Use of the 
Antitrust Exemption Has Not Significantly Affected College 
Affordability or Likelihood of Student Enrollment to Date (2006).
---------------------------------------------------------------------------

      B. H.R. 2604, THE ``NEED-BASED EDUCATIONAL AID ACT OF 2015''

    As a result of the continued need by certain schools to 
utilize the antitrust exemption for joint collaboration on 
certain financial aid practices, Rep. Lamar Smith (R-TX) and 
Rep. Henry C. ``Hank'' Johnson, Jr. (D-GA) introduced H.R. 
2604. The legislation recognizes that schools have not utilized 
the component of the existing antitrust exemption that allows 
them to share students' financial information through an 
independent third party. Accordingly, H.R. 2604 allows that 
provision of the existing exemption to expire, and only extends 
provisions for the three other activities for an additional 7 
years.

                                Hearings

    The Committee did not hold any hearings on H.R. 2604.

                        Committee Consideration

    On July 8, 2015, the Committee met in open session and 
ordered the bill, H.R. 2604, favorably reported, without 
amendment, by a voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 2604.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 2604, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 15, 2015.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2604, the ``Need-
Based Educational Aid Act of 2015.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Marin 
Burnett, who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member

           H.R. 2604--Need-Based Educational Aid Act of 2015.

      As ordered reported by the House Committee on the Judiciary 
                            on July 8, 2015.

    H.R. 2604 would extend--until September 30, 2022--a 
provision of current law that exempts institutions of higher 
education from regulation under Federal antitrust laws when 
awarding need-based student aid. Under current law, the 
provision expires on September 30, 2015. With this extension, 
colleges and universities would be able to continue to 
collaborate, but CBO expects those activities would not affect 
the workload of any Federal agency. Thus, CBO estimates that 
implementing the bill would not have a significant effect on 
the Federal budget.
    H.R. 2604 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    H.R. 2604 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The staff contact for this estimate is Marin Burnett. The 
estimate was approved by Theresa Gullo, Assistant Director for 
Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 2604 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 2604 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
2604 improves and reauthorizes provisions relating to the 
application of the antitrust laws to the award of need-based 
educational aid.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 2604 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Section 1. Short Title. Provides that the bill may be 
referred to as the ``Need-Based Educational Aid Act of 2015.''
    Section 2. Amendments. Strikes the provision of section 568 
of the ``Improving America's Schools Act of 1994'' that allows 
for the exchange, through an independent third party, of 
financial information submitted by students and their families, 
and extends the remaining antitrust exemptions contained in 
that section to September 30, 2022.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

IMPROVING AMERICA'S SCHOOLS ACT OF 1994

           *       *       *       *       *       *       *

TITLE V--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *

PART F--MISCELLANEOUS

           *       *       *       *       *       *       *

SEC. 568. APPLICATION OF THE ANTITRUST LAWS TO AWARD OF NEED-BASED 
                    EDUCATIONAL AID.

  (a) Temporary Exemption.--It shall not be unlawful under the 
antitrust laws for 2 or more institutions of higher education 
at which all students admitted are admitted on a need-blind 
basis, to agree or attempt to agree--
          (1) to award such students financial aid only on the 
        basis of demonstrated financial need for such aid;
          (2) to use common principles of analysis for 
        determining the need of such students for financial aid 
        if the agreement to use such principles does not 
        restrict financial aid officers at such institutions in 
        their exercising independent professional judgment with 
        respect to individual applicants for such financial 
        aid; or
          (3) to use a common aid application form for need-
        based financial aid for such students if the agreement 
        to use such form does not restrict such institutions in 
        their requesting from such students, or in their using, 
        data in addition to the data requested on such form[; 
        or].
          [(4) to exchange through an independent third party, 
        before awarding need-based financial aid to any of such 
        students who is commonly admitted to the institutions 
        of higher education involved, data with respect to the 
        student so admitted and the student's family relating 
        to assets, income, expenses, the number of family 
        members, and the number of the student's siblings in 
        college, if each of such institutions is permitted to 
        retrieve such data only once with respect to the 
        student.]
  (b) Limitations.--Subsection (a) shall not apply with respect 
to--
          (1) any financial aid or assistance authorized by the 
        Higher Education Act of 1965 (20 U.S.C. 1001 et seq.); 
        or
          (2) any contract, combination, or conspiracy with 
        respect to the amount or terms of any prospective 
        financial aid award to a specific individual.
  (c) Definitions.--For purposes of this section--
          (1) the term ``alien'' has the meaning given such 
        term in section 101(3) of the Immigration and 
        Nationality Act (8 U.S.C. 1101(3));
          (2) the term ``antitrust laws'' has the meaning given 
        such term in subsection (a) of the first section of the 
        Clayton Act (15 U.S.C. 12(a)), except that such term 
        includes section 5 of the Federal Trade Commission Act 
        (15 U.S.C. 45) to the extent such section applies to 
        unfair methods of competition;
          (3) the term ``institution of higher education'' has 
        the meaning given such term in section 1201(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1141(a));
          (4) the term ``lawfully admitted for permanent 
        residence'' has the meaning given such term in section 
        101(20) of the Immigration and Nationality Act (8 
        U.S.C. 1101(20));
          (5) the term ``national of the United States'' has 
        the meaning given such term in section 101(22) of the 
        Immigration and Nationality Act (8 U.S.C. 1101(22));
          (6) the term ``on a need-blind basis'' means without 
        regard to the financial circumstances of the student 
        involved or the student's family; and
          (7) the term ``student'' means, with respect to an 
        institution of higher education, a national of the 
        United States or an alien admitted for permanent 
        residence who is admitted to attend an undergraduate 
        program at such institution on a full-time basis.
  (d) Expiration.--Subsection (a) shall expire on September 30, 
[2015] 2022.
  (e) Related Amendments.--The Higher Education Amendments of 
1992 (Public Law 102-325) is amended--
          (1) in the table of contents by striking the matter 
        relating to section 1544, and part F of title XV, of 
        such Act; and
          (2) by striking part F of title XV of such Act.

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                                  [all]
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