The High Cost of (Defending) Higher Education

Imagine reading 20,000 pages of facts and figures in the course of a few months.

Imagine paying someone else to do it.

That's what Harvard--and 57 other schools--have been doing since the Department of Justice asked them to produce detailed documents about their financial practices.

Since September, the federal government has been investigating top private colleges for alleged antitrust violations, involving collusion in setting tuition, financial aid and faculty salaries.

Last summer and throughout the fall, the Justice Department sent out civil investigative demands (CID)--the civil equivalent to subpoenas--to one school after another.

The CID envelopes, according to Thomas W. Soybel, assistant college counsel at Dartmouth College, contained requests for numerous documents and "interrogatories," or lists of questions about the schools' financial aid, tuition and salary practices.

The costs to the schools have been astronomical, officials say, in terms of both human and financial resources.

Colleges have had to compile all information about what factors affect tuition rates, salaries and financial aid packages in recent years. That has led many of the schools to hire hire outside consulting firms to research, copy and catalogue all relevant documents.

In addition, nearly all the schools under investigation have hired lawyers from outside firms to advise them, making legal defense expenses a substantial portion of the total cost. Many, including Harvard, have looked to the most high-profile--and presumably most expensive--law firms in Washington.

David Merkowitz, a spokesperson for the American Council on Education, says he has heard estimates of up to $500,000 a month in the early stage of the investigation. And for the Ivies, the numbers have been ever higher.

"Given the comprehensive nature of the CID and how much is at stake for [the colleges], they'll spend that much," Merkowitz says. "The CID hits the Ivy Leagues harder because they're larger, and there are a lot more people involved."

Soybel says that Dartmouth has paid more than $100,000 in outside expenses so far, for legal fees and other costs incurred from cataloguing the 20,000 documents it submitted to the Justice Department. And Dartmouth hasn't "even begun to think about internal expenses."

Princeton University has paid a total of $250,000 so far, according to Vice President for Public Affairs Robert K. Durkee. That figure was printed in the school's alumni magazine, he said.

Bowdoin College has used only its own staff to hunt down documents, according to a spokesperson there. As a result, costs have been kept less than $100,000.

All that does not even take into account the costs of lost time.

As a result, many officials are frustrated that the Justice Department has not given any signals of where the investigation is headed.

"We had hoped we might have had substantive discussions by now, but I appreciate the enormity of the task," said Harvard Vice President and General Counsel Daniel Steiner '54, who is heading up efforts to coordinate a nationwide legal strategy. "But we do not have a clear idea of how they are approaching this."

Already Delaying Work

The investigation is already interfering with the normal financial aid setting process. Schools involved with overlap groups must decide whether to engage in their annual financial aid information exchange--a practice which is rumored to be at the center of the investigation. One Justice Department official said the schools are proceeding "at their own peril."

Meanwhile, school officials say that if they knew what the Justice Department was thinking, they might not have to spend so much money--and effort--on compiling data which might not even be that relavent.

"It's taking a hell of a lot of time," said Ron Nief, a Middlebury College spokesperson. "The feeling here is that if people [in the Justice Department] would only sit down and talk to us, it would save taxpayers a lot of money."

The bad news for the colleges is that the costs are only beginning. Many university officials expect the investigation to continue for at least a couple of months--maybe even years.

And if the Justice Department does find wrongdoing, opening the floodgates for civil suits like one already filed in New York by a Wesleyan College student, the schools might be facing triple monetary damages square in the face.

Even at a University with a $5 billion endowment, that's quite a crimp in the budget.