For many college students, a private scholarship can make the difference between an affordable degree and one that is unattainable. This is why college applicants are routinely advised to apply for as many outside scholarships as possible, in the hope of reducing the financial burden of higher education. College access organizations such as College Track and KIPP (the Knowledge is Power Program) even go so far as to require our students to apply for multiple outside scholarships, despite offering grants of our own. College Track serves first-generation college-bound students in low-income communities and KIPP has a network of free open-enrollment college-preparatory schools in low income communities.
But the happy news of receiving a private scholarship is far too often only temporary. Many universities use those scholarships as a catalyst for adjusting students' financial aid awards -- reducing grant offers that have already been made -- in the veiled practice of scholarship displacement. Colleges simply reduce the institutional grants they had offered by the amount the student earned in outside scholarships, leaving the student no better off financially. Even worse, because most colleges lack transparency around their scholarship displacement policies, many students only find out their financial aid package changed after the semester has started, and an unexpected and unplanned balance due appears on their tuition statement.
The practice is as widespread as it is misunderstood. A recent national survey by Student Beans found an estimated 50 percent of students who earn private scholarships have those scholarships displaced by their universities. Scholarship displacement is profoundly unfair to students who work to earn outside scholarships, only to find themselves in no better financial situations than if they had not, and it is unfair to private scholarship providers who are committed to reducing students' costs and debt.
In my work with College Track's students, I know firsthand the impact of scholarship displacement on student plans, finances, and stress levels. We see widespread scholarship displacement at large and small universities, private and public, across the country. Because most colleges are not transparent about their displacement policies, and because there is not a ready list of colleges that do or do not displace, we become investigators as well as advisors.
I have spent countless hours researching hundreds of colleges across the country, trying to find the correct contact people for questions about outside scholarships and any information about their policies. There is no standard layout for college websites -- some are easy to navigate with helpful chat options to answer questions, while others have poor interface design, expired links, and outdated directories. Once, while trying to get an urgent question answered for one of our students, I reached out to a university's entire financial aid department only to receive a bounce-back email from every single person. The entire department had turned over and the new staff contacts were nowhere my students or I could find. While this was an extreme case, in my experience about a quarter of colleges make it difficult to find information about outside scholarship policies.
Having this information readily available and easily findable is especially critical because colleges are inconsistent in their approaches to allowing a student's Expected Family Contribution (EFC) to be covered by outside scholarships. Most families assume that the full cost of attendance can be covered by gift aid and scholarships if they are won, but this is not always true. Considering how high the EFC is for middle-income families and even some low-income families, it is essential for students to know if their EFC is required to be paid out of pocket. If colleges simply post their outside scholarship policy on their websites, it would be a small lift on their end that would save time and heartache for all.
Students deserve to have all of this information before they decide where to enroll. The worst-case scenarios we see are when students select a college specifically because of the financial aid package they received but without understanding the college's outside scholarship policy. Decisions carrying such extreme financial implications should never be made with only partial information.
We also need to stop the practice of not telling students their scholarships have been displaced until after the fact. College Track works with first-generation students from low-income communities, and they strongly consider college choice based on the financial package. Our students report award packages being changed without a call or email to alert them. They reach out, confused, to their College Track advisors to help them understand why the numbers on their online student account are no longer matching the numbers on their original financial aid award letters. Students who had gone into the Fall term expecting to owe nothing or even receive a refund are learning mid-semester that the college reduced or canceled some of their aid. Colleges need to clearly communicate with students if anything is altered from their original award package, and they need to provide a space where the student can ask questions and understand why the scholarship displacement occurred.
Help may be on the way in the form of legislation to eliminate or reduce colleges' ability to practice scholarship displacement. Representatives Andy Kim and Mike Kelly recently introduced the , bipartisan federal legislation which would require colleges to notify all prospective and enrolled students of their outside scholarship and displacement policy. Both Pennsylvania and Washington have recently joined Maryland and New Jersey in passing legislation banning scholarship displacement at public colleges and universities in their states. The California Legislature has introduced a bill, up for consideration this week that, if enacted, will ban scholarship displacement at all public and private colleges in the state.
Until legislation becomes a widespread reality, there are steps we can take to help students better navigate the complexities of scholarship displacement. Those of us who serve as advisors to students can share what we know about college's policies, and we can proactively inform our students about how to incorporate, or not, outside scholarships into their financial plans. DISSCHOLARED, an ed-tech platform designed to explain universities' private scholarship policies and scholarship displacement, gives us a good start on this, with its database of outside scholarship policies and open-source model where users can add information.
Colleges must become transparent about their scholarship displacement policies, making the information prominent and easily findable on their websites, along with contact information for financial aid. Warnings about scholarship displacement should be mentioned on college tours and included on every financial aid award letter, and students should be proactively notified (and offered alternatives) whenever scholarships are displaced. I am hopeful more universities will align their policies with their missions and commitments to equity. Some colleges, such as the University of Pittsburgh, have declared they don't agree with the practice of scholarship displacement and do not use it. Let's encourage others to follow their lead.
Funders and private scholarship providers can use their resources to help students navigate and mitigate scholarship displacement. The Michael and Susan Dell Foundation are leaders in this area. Not wanting any scholar to be penalized for earning scholarships, the foundation offers flexibility in how and when funds are accessed -- even offering deferment to graduate school -- to avoid having scholarships displaced.
At College Track, we know keeping college affordable and student loan debt below $30,000 significantly increases student graduation rates and sets them up for lives of social mobility. When scholarships are displaced, this entire equation is disrupted, and not in favor of the scholar. Let's change that, before more students are left with paying even more than expected for their degrees.