When a federal district judge ruled earlier this month that MIT had violated federal antitrust laws, administrators at many prestigious American universities let out a collective groan.

In the past two years, MIT and the eight Ivy League colleges had already garnered plenty of bad publicity about alleged price fixing. Under fire was the "overlap" process, in which the universities representatives collaborated to determine financial aid awards.

The Justice Department originally brought a lawsuit against all nine colleges, but dropped the suit against the Ivy League schools in exchange for a promise that the financial aid meetings would cease.

But the Justice Department's efforts are only one factor in the ongoing controversy over overlap.

July, in fact, brought optimism for overlap defenders, as President Bush signed the Higher Education Reauthorization Act. The law allows college financial aid officers to cooperate on determining "principles of professional judgment."

Ivy League presidents heralded the act as a positive step towards helping institutions better allocate scarce financial aid resources.

The recent ruling against MIT by Judge Louis C. Bechtle of the Eastern District of Pennsylvania was a less appealing signal for college administrators.

But MIT officials say it is only a temporary setback in their effort to show that the practice was legal.

MIT spokesperson Charles Ball said yesterday that the institute will file its formal notice of appeal in early November. A three-judge panel is expected to hear the appeal sometime in the spring, he said.

MIT has "a great deal of optimism" that it will eventually prevail in the case, Ball said.

"Abundant" Evidence

In his decision, Bechtle found "there was abundant and uncontroverted evidence that the fundamental objective of the Ivy Overlap Group was to eliminate price competition among the member institutions."

Justice Department officials, who brought the case against MIT and the Ivy League, applauded the verdict as a victory for American consumers.

"The court's decision confirms the Department's position that students and their families are entitled to the full benefits of price competition when they pick a college," said Charles A. James, acting assistant attorney general in charge of the Justice Department's antitrust division.

"They have the right to compare prices among schools, just as they do in shopping for any service," James said.

Watching With Interest

Harvard officials have been watching the MIT case with interest. And they say the Higher Education Reauthorization Act allows them to continue many important cooperative activities that the Justice Department opposed.

As the dust settles, the outlook for Harvard's financial aid remains uncertain. The ultimate effects of the federal government's intervention should be clear by next spring, when the Class of 1997 decides where to matriculate.