Source:  Phil Noble with www.paimages.co.uk

#HandsOffMyScholarship Message to Lawmakers

Student debt, now more than a trillion dollar crisis, impacts millions of Americans. Private scholarships play a crucial role in mitigating the increasing costs of higher education. Many students seek private scholarships to help them pay for college. However, many students do not gain the full benefit of the private scholarships they win, due to scholarship displacement. Scholarship displacement is a practice in which universities decrease institutional aid for a student after the student receives a private scholarship.

Although federal regulations and college policies may require colleges to reduce need-based financial aid when a student is over-awarded, colleges have the flexibility to eliminate unmet need and to reduce student loan debt and student employment before reducing institutional grants.

Why should a student spend time and effort applying for and winning a private scholarship, if the net price of their college education remains unchanged because of scholarship displacement? How can a foundation, corporation or other philanthropic entity justify a scholarship program to its donors and board, when there is no net improvement in cost to the student due to scholarship displacement? This issue must be addressed.

We are requesting reform on both the state and federal level to address this unjust policy that discourages students from seeking private scholarships and discourages philanthropic organizations from awarding scholarships to students.

The state of Maryland recently passed a law (MD HB266) to eliminate scholarship displacement after hearing the frustrations from a plethora of students and scholarship providers. We hope that other states will enact similar legislation. On the federal level, lawmakers should modify student financial aid regulations to better support students, since the current regulations do not yield a financial benefit to states or federal government.

We recommend the following policy changes, which are aligned with policy proposals outlined in a 2013 white paper on scholarship displacement by the National Scholarship Providers Association:

1. Establish a priority order that requires institutions to eliminate unmet need before student loans, loans before student employment,  and employment before grants when addressing an over-award
2. Prevent scholarships and fellowships from displacing other aid by striking the references to scholarships and fellowships in the definition of estimated financial assistance.
3. Increase over-award tolerance beyond $300 to relieve the pressure on institutions to reduce aid.

Fairness, access, and opportunity for all are core tenants of the American dream that must be upheld and protected when undermined. In a time when millions of Americans are faced with the tremendously burdensome load of school loan debt, lawmakers have a duty to act. Addressing scholarship displacement to promote a public-private partnership aimed at making college more affordable is a great first step.