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Avoiding Award Displacement

Updated: Mar 22, 2021

Award displacement exists when a student’s awarded private scholarship(s) reduce other forms of financial aid promised to that student.

The Facts:

  1. Universities send students an initial financial aid award letter with an offer of an institutional scholarship.

  2. If a student works hard to find and win a private scholarship, some universities withdraw their initial institutional scholarship and redirect it to another student, negating the impact of the private scholarship.

  3. This may be done to comply with federal and state laws. More often, it is done to redistribute the aid to another student.

  4. This practice is unfair to students who devote their time to finding private scholarships, only to find out at the end of the process they are no closer to being able to afford college.

  5. Effective July 2017, Governor Larry Hogan signed a bill to make Maryland the first State in the Nation to restrict scholarship award displacement at Maryland’s 4-year public Colleges and Universities

Students attending private colleges or public schools outside of the state of Maryland should carefully read their financial offers.  If award displacement is an issue some suggestions are listed below.

College Financial Aid Office

  1. Ask the college financial aid office to use the scholarship to replace student loans and student employment, instead of college-awarded grants or scholarships.

  2. Ask the college financial aid office to use professional judgment to increase the cost of attendance to cover real expenses, such as student health insurance, a computer, child care costs and above-average textbook costs.

Scholarship Provider

  1. Ask the scholarship provider to defer the scholarship to a subsequent year when it is less likely to be displaced, perhaps even until the student enrolls in graduate school.

  2. If the displacement is occurring because of restrictions on the use of the scholarship, such as a textbook-only or tuition-only scholarship, ask the scholarship provider to relax those restrictions.

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