Are you able to Prevent Scholarship Displacement?

Working with families on securing scholarships, I'm always asked whether scholarship displacement can be avoided.

I wish there was a monochrome answer, however, it's unfortunately a gray area attending college funding.

Still, we chose to do some research, contacting educational funding departments all over the country, and also had our own run-in with this rule.

Here is what we learned so your family will keep your hard-earned scholarship and educational funding dollars…

What Is Scholarship Displacement?

Scholarship displacement, sometimes called “over-award” by colleges, can impact need-based educational funding awards within the package using their school, whether or not the scholarship (or scholarships) don't cover all of their expenses.

Many colleges argue that, whenever your child receives a scholarship, their “need” changes.

For example, if your student is awarded a $1,000 scholarship, the college may determine that their need has correspondingly been reduced by $1,000.

Usually, this happens if your child is deemed “over-awarded,” and therefore the mixture of the scholarship and initial financial aid package offering exceeds the total cost of attending (COA) the college.

If that occurs, the school may decide to provide the $1,000 institutional grant they'd originally earmarked for the child to a person else who continues to have an unmet need.

However, it's important to know if there's a way of preventing displacement and, if it occurs, which help ought to be reduced first.

What Type of Aid Is Reduced?

It is important to note that, according to the National Association of Scholarship Providers, “Certain types of federal aid, such as the Federal Pell Grant, aren't susceptible to the over-award regulations and therefore are never reduced.”

In many instances, this is actually the order from first to last:

Government student loans – Unsubsidized
Government student education loans – Subsidized
Work-study allotments
Grants

Duke University follows this practice:

“For a Duke student receiving outside scholarships (and need-based aid); the outside scholarship cash is used first to replace any loans or work-study a student has been offered. When the outside scholarship exceeds the quantity of loans and work-study offered, it'll then begin to lessen the institutional scholarships and grants (not federal grant for example Pell).”

And Duke, undoubtedly, isn't the only school that manages scholarship displacement for the reason that matter.

Financial aid offices also provide the ability to 'reclassify' the unsubsidized loans as a replacement to your child's EFC. If reclassifying the amount gets their total financial assistance underneath the COA, you ought to be in the clear.

Still, this means they do have carte blanche to do something as they please (in most states.. continue reading). However, scholarship displacement should only take place in case your student is considered “over-awarded” and the school participates in the practice.

One exception high is a obvious rule is within Maryland in which the practice of scholarship displacement has recently been banned at public institutions!

In most cases, you will discover ahead of time whether a specific college uses scholarship displacement. The data might be accessible through the school's website, likely in a section that discusses financial aid, or your child may need to contact the educational funding office directly for information.

If your child discovers that scholarship displacement could negatively affect them, usually through the decrease in institutional grants, they need to evaluate if the changes which school they wish to attend. It affects the general affordability of having instruction at this particular college, so it's essential that your student take this into consideration when applying or deciding to attend a particular school.

Can You Fight Back Against Scholarship Displacement?

If you believe your son or daughter's financial aid was reduced because of scholarship displacement, you are likely wondering when there is anything you can do.

While there isn't any guarantee that a college will adjust your son or daughter's financial aid, i am not saying they shouldn't ask if scholarship displacement played a job and when the choice could be changed.

Here is a true story where we fought back and won:

We had one parent call me, completely distraught, because her son had used our program to secure $6,500 in scholarships for his freshman year in college. The next thing they knew, the college threatened they'd reduce his educational funding package by that amount. I had been upset on her!

So what did I do?

I known as the school myself and asked “hypothetically” if my child would lose financial aid if he received outside scholarships.

The person I spoke with said no!

I told mom to call back and ask for someone else and, the next thing we knew, i was told that which was a mistake and didn't reduce anything!

So her child could keep his hard-earned $6,500 (some of them renew, too!) as well as his financial aid package.

In conclusion, scholarships are worth signing up to, however, you need to know how your university handles outside scholarships.

Until your child is “over-awarded,” and even after with respect to the school, it's still extremely good for secure scholarships for school.

This post was originally featured on The Scholarship System.

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