The Scholarship Award Displacement Dilemma
When you’re in high school, you start hearing about the high cost of college. You may decide to pursue private scholarships to get a head start. So you write essay after essay, do community service on the weekends and manage to score some scholarships. When you get into college and have to report them (which you do), your college can decide to reduce your other financial aid and give it to other students who didn’t get scholarships.
After all that hard work, your net return is zero. That’s not fair, is it?
It’s called scholarship award displacement, and Maryland recently passed a law to ban it.
Central Scholarship, a nine-person nonprofit organization that gives more than $1 million to Maryland students annually, stood up and demanded that scholarship award displacement is addressed. Jan Wagner and Michele Waxman Johnson proved that you don’t have to be big to enact change.
For organizations like Central Scholarship, scholarship award displacement is very frustrating. Their main goal is to help students afford college, but colleges can negate that help by displacing the scholarships. “It totally undermines our very existence,” said Wagner, president of Central Scholarship.
The way financial aid works is that each school has its own cost of attendance, which includes tuition, fees, books and other supplies, and on-campus housing or an allowance for off-campus housing and food. From that total cost, they subtract an expected family contribution, which is based on your or your parents’ financial situation.
What’s left is your financial need. The school then crafts a financial aid package to cover that need with loans, scholarships, grants and work study. All financial aid, including private scholarships, cannot exceed your financial need. If a school regularly over-awards, it can lose its access to federal student aid for their students.
To offset that additional award, schools can reduce any part of their financial aid package. Most schools choose to reduce work study or loans so the student will not have to work as much and will not leave school with as much debt. That lines up with the goal of scholarship providers. The problem is when schools choose to reduce grants and scholarships.
In the past, some organizations, in an attempt to combat scholarship award displacement, have given their awardees the option to defer their award until after college. Then, they can use the money to pay off loans the scholarship would not have replaced — a creative solution that may be available in states that do not have laws about scholarship award displacement.
If you’re in the position where you’re trying to collect funds for college, make sure you talk to your college’s admission office and ask about their private scholarship policy. If they displace awards, ask that they don’t or consider going to another school.
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