President Bush yesterday signed into law an act expanding federal student aid and allowing Harvard to once again cooperate with other universities in allocating financial aid dollars.

The president to the eight Ivy League institutions praised a section of the act in a rare joint statement. They said the act "will help insure, through our financial aid practices, that a college education at our institution remains accessible to the maximum possible number of needy student."

The act also included changes making more federal financial aid available. It makes Pell Grants available to families that would not have qualified before, and it also greatly increases the availability of student loans.

Harvard students currently receive $35 million in federal loans each year.

The act's impact on the bidding wars which recently began between Ivy League colleges vying for desirable students is still unclear.

College officials say the bidding wars are the result of their agreement last spring to stop sharing financial aid information. The Department of Justice maintained the cooperation, known as "overlap" violated antitrust laws, and the colleges ceased sharing information in exchange for the Justice Department dropping a lawsuit against them. The colleges had defended the practice because they said it kept money from becoming a factor in college choice .

The statement from the Ivy League president said, "Our universities have long agreed to award our own financial aid funds to undergraduates only on the basis of demonstrated financial need. Last year we were obliged to suspend this agreement because the Department of Justice disputed its legality under the anti-trust laws. Now that the Higher Education Reauthorization Act has been signed into law, we plan to resume our financial aid agreement in the manner authorized by the new statute."

But the agreement limits the extent to which the institutions can cooperate.

"They don't tell in the press release that [the act] explicitly forbids them from going back to doing what got them sued," said one Democratic Senate staff members who worked on the 411 page, $115 billion piece of legislation .

In fact, the act says colleges cannot "discuss or agree with each other on the prospective financial aid award to a specific common applicant for financial aid." Until 1991, representatives of the schools met annually to discuss specifically financial aid packages for individual students. Those meetings were the crux of the Justice Department 's original objections, the primary reason the schools were seen as conspiring to fix prices and the center of a recently concluded trial where MIT defended the practice.

The act does allow the institutions to jointly agree to affair only need-based financial aid. It also allows uni-

versities to "discuss and voluntarily adoptdefined of professional judgement for determiningstudent financial need." The colleges had agreednot to engage in such practices when they settledthe Justice Department suit.

John H. Shattuck, Harvard's vice president forgovernment, community and public affairs, calledthe passage and signing of the act " a verypositive development."

The Senate staff member, speaking on conditionof anonymity, said he did not think the act wouldhave the effect of stopping bidding wars.

The "defined principles of professionaljudgement" allowed by the act may allowed theinstitution to agree on detailed financial aidformulas. That would have the same effect asoverlap meeting about specific cases.

But the Senate staff member said thecomplexities of determining financial need make itunlikely that a set of formulas could take theplace of meeting about specific cases.

In signing the legislation, President Bush saidit would help the children of middle and lowincome families. Sen. Edward M. Kennedy '54-'56was present as the signing ceremony. Kennedy was akey backer of the act, Shattuck said