Scholarship Award Displacement: The Hidden Practice

Did you know that many universities and colleges across the U.S. penalize students for receiving private scholarships, or those not offered by the school?

This is called scholarship award displacement. Scholarship award displacement, sometimes called “over-award” by colleges, can impact need-based financial aid awards from a student’s school, even if the scholarship(s) do not cover all of their expenses. Many universities believe this hidden practice provides an opportunity to “redistribute aid” to other students who may need it more. Some institutions reduce institutional aid first, while others replace loans and work-study before reducing any institutional aid. According to a survey, 50% of college students who receive private scholarships or outside aid experience scholarship award displacement. This prevents students from making full use of the scholarships they have earned.

In September 2013, the National Association of Scholarship Providers (NSPA) published a white paper on the “Impact of Award Displacement on Students and their Families: Recommendations for Colleges, Universities, Policymakers, and Scholarship Providers”. Initiatives picked up steam in December of 2017, when Justin Onwenu, Rice University President, led a national campaign, #HandsOffMyScholarship. The campaign advocated for State and Federal leaders to dismantle scholarship displacement. In 2017, Maryland became the first state in the nation to outlaw scholarship award displacement at all Maryland public universities. Former Vice President of Central Scholarship, Michele Waxman Johnson, led advocacy efforts in Maryland that helped pass SB327/HB 266.

In 2019, the YesSheCanCampaign, a 501c3 nonprofit organization that I founded, joined the fight to address scholarship award displacement. In 2019, as an undergraduate student, I experienced scholarship displacement after receiving a $25,000 scholarship from a private scholarship foundation. When I notified my university of this scholarship, my university eliminated half of my need-based scholarship, my federal work-study, and increased my federal loans. I was left to pay over $15,000 out of pocket. My university gave me two choices: either drop out of college or get a private loan. While I was experiencing this brutal practice, I learned that my friend Gabrielle also became a victim of scholarship award displacement. Our university never notified us about their private scholarship policy and how it would displace a private scholarship. My university even encouraged us to apply for private scholarships. After learning that scholarship displacement was a national issue, my organization launched a national campaign to address scholarship award displacement nationwide. I had the incredible opportunity to share my story with my local State Senator, Troy Singleton. Within a few months, he introduced a bill (S985/A3789) to outlaw scholarship award displacement at all public universities in New Jersey. On September 24, 2021, Governor Murphy signed the legislation into law, making New Jersey the second state to outlaw scholarship award displacement.

But, the climb does not stop here.

In 2019, I had the incredible opportunity to share my story with Congressman Andy Kim (D-NJ) in Washington, DC. On September 27, 2021, Congressman Kim and Congressman Mike Kelly (R-PA) introduced the Helping Students Plan for College Act, the first-ever federal legislation that addresses scholarship award displacement nationwide.

In the Summer of 2021, our organization launched a free ed-tech platform called DisScholared, which helps students and families understand universities’ private scholarship policies and the practice of scholarship award displacement. Our goal is to ensure students and their families are able to make informed college and financial decisions. Through our research and experiences, we learned that some universities are not transparent about their private scholarship policies. Our website provides a database of universities’ private scholarship policies and resources to help students, families, college counselors, nonprofit organizations, and more navigate this issue.

Scholarship award displacement is finally starting to make national news. There have been many articles that provide recommendations on how to tackle this issue. Our organization truly believes that no student should be penalized for earning a private scholarship; we will continue to fight until scholarship award displacement is dismantled. It is up to us to ensure that every student has the opportunities, resources, and funding to achieve a higher education. The climb continues.

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