Beyond Scholarship Displacement: Empowering Students with Choice and Flexibility
Scholarship displacement, where outside scholarships reduce other financial aid awarded to a student, is a complex issue with significant consequences for both students and scholarship providers. With awarding season here, ensuring funding reaches students without displacement is a top priority. We've been actively researching this challenge, engaging in conversations with over 50 scholarship providers and numerous students facing displacement firsthand.
Displacement is influenced by a web of federal regulations and institutional financial aid policies and practices, often outside the direct control of individual scholarship providers. The impact on students is undeniable. Displacement can disproportionately burden students with increased financial hardship, creating a situation where receiving a scholarship actually makes paying for college more difficult and expensive. Recent research estimates that up to 50 percent of students experience displacement, making it incredibly widespread.
While there are no easy solutions, there's still much that scholarship providers can do. Providers can navigate this issue through creative approaches that empower both themselves and the students they serve. Here's a breakdown of various strategies, for implementation in both the immediate and the long-term, that can create greater control and flexibility for students and providers alike.
Transparency and Communication:
Include displacement language in communications with students, explaining how outside scholarships they receive from your organization might impact financial aid packages, including institutional scholarships, grants, loans, and work study.
Provide clear guidelines to institutions about requirements for notifying your organization if gift aid displacement is to take place and instructions on what should happen with your award if it does.
Be transparent with students, institutions, and all stakeholders about displacement throughout the process.
Award Flexibility:
Explore paying students directly (check or ACH) to give them more control. Be aware of potential tax implications for students.
Allow scholarships to be used for a wider range of approved Cost of Attendance expenses (books or housing, for example). Be mindful of tax implications for certain expense categories.
Let students defer awards to future terms or years, including summer or graduate school, to minimize displacement.
Instead of sending them a set amount, consider allowing students to request award amounts based on their specific needs for each term or year.
Student Education and Empowerment:
Provide comprehensive resources to educate students on understanding financial aid packages and scholarship displacement.
Notify incoming college students of awards well before deadlines (ideally before May 1), allowing them to compare financial aid packages from different institutions with a clearer picture of potential displacement.
Additional Approaches:
Partner with 529 plans to award students after they receive their financial aid estimates, minimizing displacement impact. (Want more to support your students through 529s? Contact Students First Consulting to learn about our expertise in this area.)
Explore offering loan repayment assistance programs.
By implementing these solutions and fostering open communication, you can empower students to make informed financial decisions and ensure their scholarships have the greatest impact on their educational journeys.
Remember, these options often involve collaboration and navigating policies outside your direct control. By advocating for students and exploring creative solutions, you can significantly impact their success.
