Scholarship Displacement
Definition
Scholarship displacement occurs when a student's receipt of a private scholarship reduces the amount of other financial aid they receive from their college or university.
Detailed Explanation
Scholarship displacement is a practice that can negatively affect college students who have been awarded need-based financial aid in addition to private scholarships.
When a student wins a private scholarship, the college or university may reduce the amount of institutional aid, such as grants or scholarships, provided to that student.
This practice is often implemented to avoid exceeding the student's calculated financial need or cost of attendance. While institutions argue that displacement allows them to redistribute limited financial aid resources more broadly among students, it can be frustrating for students who find that external scholarships do not decrease their out-of-pocket expenses as expected.
The specific policies regarding scholarship displacement vary by institution, making it important for students and families to understand how external scholarships may impact financial aid packages.
It's also important to note that scholarship displacement is illegal in six states:
- California
- Maryland
- Minnesota
- New Jersey
- Pennsylvania
- Washington
Example
A student receives a $5,000 scholarship from a private foundation. When the college learns of this award, it reduces the student's need-based grant aid by $5,000, leaving the student's total aid package unchanged and not decreasing the student's out-of-pocket costs for attending college.
Key Articles Related To Scholarship Displacement
Related Terms
Cost of Attendance: The total amount it will cost a student to attend school, including tuition, room and board, books, and other expenses.
FAFSA (Free Application for Federal Student Aid): A form completed by current and prospective college students to determine their eligibility for student financial aid.
Financial Need: The difference between the cost of attendance at a school and the family's ability to pay, as determined by the FAFSA or other financial aid applications.
Institutional Aid: Financial aid provided by colleges or universities to their students, which can include scholarships and grants.
FAQs
Why do colleges practice scholarship displacement?
Colleges may practice displacement to redistribute limited financial aid resources among more students or to ensure that the total aid does not exceed the student's financial need or cost of attendance.
Can I appeal a scholarship displacement decision?
Yes, students can often appeal scholarship displacement decisions by contacting their school's financial aid office and providing justification for why the additional scholarship should not reduce their financial aid package.
How can I avoid scholarship displacement?
Students can minimize the risk of displacement by informing themselves about their school's policies on external scholarships and discussing potential impacts with the financial aid office before accepting external awards.
Do all colleges practice scholarship displacement?
Not all colleges practice scholarship displacement, and policies can vary widely between institutions. It's important for students to research and understand the policies of their particular school.
Editor: Ashley Barnett
