Award displacement occurs when receipt of one form of financial aid, such as a private scholarship, leads to a reduction in other forms of financial aid, especially grants and scholarships. For example, federal and state statutes and regulations, as well as institutional policies and practices, may require revisions to a student’s need-based financial aid package when the student receives a private scholarship. Institutional policies concerning award displacement are often described in a formal outside scholarship policy.
The National Scholarship Providers Association (NSPA) conducted a survey of scholarship displacement policies for a carefully stratified sample of 4‐year colleges and universities in September 2011. The survey responses were well‐distributed according to a variety of characteristics, such as geography, percentage of Federal Pell Grant recipients, tuition and fees, enrollment, minority percentage and selectivity.
Four-fifths (79%) of the colleges had “optimal” outside-scholarship policies that reduced unmet need (if any) before self‐help and self‐help before gift aid.
One-sixth (17%) of colleges either reduced gift aid first or required students to maintain some amount of unmet need (e.g., summer work expectations and minimum student contributions).
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