U.S. to Press Conspiracy Suit Against MIT : Colleges: The Justice Department contends that the school colluded with eight Ivy League institutions to limit aid to needy students.

Saying that negotiations with Massachusetts Institute of Technology had broken down, Justice Department officials announced Monday that they would go back to court to resolve allegations that MIT conspired with eight Ivy League colleges to establish a limited level of financial aid for needy students.

“The department has negotiated in good faith with MIT, but it has been unwilling to accept our settlement offer,” Robert Litan, deputy assistant attorney general for the antitrust division, said in a statement. “We will proceed with this case.”

Two years ago, the Ivy League schools--Brown, Columbia, Cornell, Dartmouth, Harvard, Princeton, the University of Pennsylvania and Yale--signed a consent decree settling their part in the litigation, but MIT refused. The Ivy schools agreed to abandon annual meetings and discussions to fix tuition, faculty salaries or the payments needy students would be expected to make on their own.

MIT officials confirmed Monday that “no agreement on outstanding issues” had been reached with the government and said that both sides were ready to argue the case again. They noted that the school’s president, Charles M. Vest, has disputed the Justice Department’s position on grounds that “student aid is the opposite of an across-the-board price-fixing policy. It is a gift-setting policy.”

The court dispute began during the George Bush Administration and was inherited by the Clinton Administration.

Beginning in the 1950s, representatives of MIT, the Ivy schools and other private colleges met each April to review the cases of applicants who had been accepted by one or more schools to ensure that the schools offered essentially the same aid package. The purpose of the policy, according to school officials, was to avoid a “bidding war.” But the Bush Administration sued them for violating antitrust law.

Last year, in a test case filed by MIT, a federal judge ruled that colleges and universities that share information on the finances of their prospective students before giving out scholarship aid violate federal laws against price fixing.

However, last September the 3rd U.S. Circuit Court of Appeals reversed the ruling and remanded the case to U.S. District Judge Louis C. Bechtle of Philadelphia. The appellate court said that, although MIT is subject to antitrust law, the school should have the chance to argue that its financial aid policy advanced some social goal that offset its anti-competitive impact.

Following that decision, MIT and the Justice Department have been negotiating to reach a settlement.

MIT spokesman Ken Campbell said Monday that he believes a settlement still is possible. But a department spokesman said that the antitrust division is ready to prosecute the MIT case “to get a fair deal for college applicants and their families and to keep faith with the requirements of law that collusive arrangements which result in higher prices to the consumer will not be countenanced.

“As a result of this conspiracy, entering students paid $1,000 to $2,000 more to attend college,” the department said.

The Ivy schools, in agreeing to the consent decree in May, 1991, acknowledged that they were colluding to fix and limit the amount of financial aid they gave out. But they argued that they were legally justified on grounds they were acting as charities and not businesses engaged in interstate commerce.

They said that their goal--promoting access to higher education and diversity among student bodies--was a congressionally sanctioned purpose that should override any antitrust concerns.