What is Scholarship Displacement and Why Should You Care?

50% of student who are awarded private scholarships experience scholarship displacement  

Scholarship displacement is when something your teen has been offered (awarded) by their college is taken away, dollar for dollar, because your teen has brought in additional scholarships. The premise is that, You no longer have the same "need."

(1) Most colleges will not remove/displace a merit scholarship, but some do, because in their calculations, the college's money/scholarship are the LAST dollars to fill your college cost bucket. You must read the financial aid and scholarship pages carefully.

Most of the time, what is removed with scholarship displacement goes something like this.:

In each example, let's say the student won a local scholarship for $6000.

(2) 62% of schools reduce institutional grants.
If the college is offering a need based discounted dollar amount, they will reduce that amount by the amount of your scholarship. If the college grant/discount is $20,000 then subtract the $6k. That $20k is not only worth $14,000.

(3) 55% reduce student loans. This part can get confusing. Usually what the college is doing is they are changing the SUBSIDIZED student loan to UNSUBSIDIZED. Or part of it will be changed equal to the scholarship amount. The difference here is if your loans go from subsidized to unsubsidized, your loan now accumulates interest every month.

(4) 24% reduce student employment. Usually this is Federal Work Study. Parents whose kids are relying on Work Study to cover some portion of college costs are not aware of how Work Study works. Work Study is not a scholarship. It's a job. You don't get paid for the job until you actually work the hours. Thus, you have to come up with/PAY that dollar amount when the tuition bill is due, and then when your teen works the job they get a paycheck.

So you see, for those who are attending college on multiple scholarships, its unlikely that they will be impacted with scholarship displacement. But if you have grants, student loans, or work study, it might.


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