Maryland Bans ‘Scholarship Displacement’

July 6, 2017

A new Maryland law that took effect at the beginning of July prevents public colleges from practicing scholarship displacement -- the practice of shifting financial aid away from students after they receive outside scholarships.

The law makes Maryland the first state in the country to ban scholarship displacement by public institutions, according to The Baltimore Sun. Its supporters say they are considering attempts to expand the law to cover private colleges.

They contend it is unfair for institutions to take away financial aid because a student took the initiative to seek and win scholarship money in order to make college more affordable. But backers of scholarship displacement argue the practice allows colleges and universities to move their finite financial aid dollars to other students who suddenly demonstrate greater need than scholarship recipients.

Maryland’s new law includes some conditions under which public institutions can decrease financial aid. Those conditions include when a scholarship provider gives permission and when a student’s total aid exceeds the cost of college.

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