The federal government just finished investigating a small group of colleges over a misunderstanding. It’s interesting that the investigation wasn’t widely reported before now.

Eric Hoover of the Chronicle of Higher Education reports.

In Wake of Federal Probe, ‘a Chilling Effect’ on Talk of Student-Aid Reform

The U.S. Department of Justice has ended its investigation of a handful of colleges whose presidents had discussed reforming their financial-aid policies. As the Web site Inside Higher Ed first reported on Thursday, the institutions received letters this week stating that the Justice Department had closed the investigation “without taking action.”

The federal inquiry was prompted by a January conference hosted by the Council of Independent Colleges. During a session titled “Collaborative Efforts on Student Aid and Admissions Policies,” some college leaders discussed how—or whether—they could limit their use of merit-based financial aid and reduce bidding wars for applicants.

In a May 21 letter to several presidents who had participated in that session, the Justice Department wrote that an agreement “to restrict tuition discounting and prevent colleges from changing or improving financial-aid awards to individual students” may restrain competition in violation of antitrust laws. As it turned out, there had been no agreement—just a wide-ranging dialogue. (Read my full story from June here and a follow-up post here.)

On Thursday I interviewed Tori Haring-Smith, president of Pennsylvania’s Washington & Jefferson College, which was among the institutions that the department investigated. Following is an edited transcript of our conversation.

Q. How would you describe what happened here?

A. I think what happened is the DOJ heard about a conversation at the CIC conference and misconstrued it, and I can understand why they misunderstood it, given the title of the session. The title implied somehow that we were at that moment going to agree to some kind of policy when, in fact, what we were doing was presenting ideas and asking, Should we work to expand the possibility for collaboration by lobbying the DOJ or the Congress? It was a discussion; nothing was agreed to.

Q. What’s your sense of how this investigation has affected presidents at other colleges?

A. The effect of this letter and the media attention have been to make presidents extremely cautious about any discussions of financial aid. A chilling effect.