What is Award Displacement?

  • Award displacement is the practice of a college/university reducing the amount of financial aid for a student due to other financial awards received. This can be a third party, private scholarship or tuition assistance from an employer-sponsored benefit program.
  • Displacement may also result in ineligibility for student loans or work study programs.

What are the Implications of Award Displacement to Program Participants?

  • Award displacement prevents the student recipient from receiving the full benefit of the scholarships they receive or the employee benefits available to them. Utilizing outside monies to help offset their cost of attendance gives the impression that they are being penalized for their successes.
  • Many colleges will not allow a student to use private scholarships or awards to reduce the expected family contribution portion of the student’s cost of attendance.
  • Displacement impacts only the neediest of our participant population. Students with a higher family/personal income do not qualify for need-based aid and are therefore not impacted by this practice.

What Can I Do to Reduce Award Displacement for my Audience?

  • Encourage employees and recipients to review the colleges outside scholarship policies before making an enrollment decision. As of November 2022, five U.S. states (Maryland, Washington, Pennsylvania, New Jersey, California) now prohibit the practice of scholarship displacement.
  • Consider adding a requirement to your program’s policy stipulating the award may be used to reduce unmet financial need first, followed by student loans.
  • A student’s financial situation can change from year to year. Many institutions offer one-year grants to incoming freshmen to boost enrollment which don’t carry to subsequent school years. Allow flexibility in the program policies to permit award deferrals to a subsequent year when these situations arise.
  • If restricting the award to specific expenses is causing the displacement, consider allowing flexibility in the expenses the award can cover (i.e., room & board or meal plans).
  • Consider offering a post-graduation Student Loan Repayment program instead of a competitive scholarship or tuition assistance benefit as this can bypass displacement practices.
  • Lean on your ISTS Program Coordinator or Administrator for best practice advice and guidance in dealing with award displacement situations.

Related Reading

  • Check out this one-pager on the Helping Students Plan for College Act, a bipartisan bill (introduced in the U.S. House of Representatives in September 2021) that seeks to require for higher education institutions to “notify students of the impact of private scholarships and grants on eligibility for institutional financial aid”.
  • Learn more about different award scenarios and how award displacement could be an issue in this write-up from Youth Foundation.