COMMENTARY: It’s time to end scholarship displacement

When Jason Vazquez began his freshman year at the University of California, Berkeley, scholarships were a crucial part of his college financing plan.

As a low-income student who had navigated the financial aid process alone, he was thrilled that, in addition to receiving financial aid from UC Berkeley, he had been selected – through a competitive process that involved an essay and an interview — for a $1,500 scholarship from a local organization to support his education. After enrolling at the university, however, he discovered that Cal had “repackaged” his financial aid after he reported the $1,500 scholarship. Instead of gaining additional funding to pay for college by winning an outside scholarship, Jason found himself with an altered financial aid package that included more loans, less grant money, and less work-study.

Known as “scholarship displacement,” this is a little known but common practice wherein one form of a student’s financial aid, like a university grant, is reduced or canceled when the student receives an outside scholarship. Scholarship displacement affects thousands of students across California and the United States, unnecessarily undermining their ability to seek additional sources of funding for their education.

After spending time and effort finding and applying for private scholarships, students like Jason are blindsided when their hard-earned scholarship dollars result in the cancellation or reduction of financial aid they were awarded by their college. Jason had hoped to use his $1,500 scholarship to pay for non-tuition expenses such as books and housing, but due to scholarship displacement, he ended up with less money to cover critical costs. That left him both frustrated and discouraged.

In our work with first generation and low-income students, we have seen first-hand how these policies and practices impact college students working hard to secure dollars to pursue their education and their dreams.  That is why we, and hundreds of organizations and colleagues across the state, strongly support Assembly Bill 288, which would prohibit scholarship displacement, and prevent students from losing the critical scholarship dollars they work hard to attain and need to pay for college.

With the rising costs of college, and decreasing financial aid available, scholarships are a lifeboat for low- and middle-income students. When the Pell Grant program (the largest federal grant program for undergraduate students) started in 1973, it covered 80% of the cost of attendance at a public college; in 2020, it covered less than 30% of the cost. Scholarships play an important role in bridging the college affordability gap.

“As California students struggle with figuring out how to achieve their dream of earning a college degree, we should not punish students who receive private scholarships by reducing their financial aid awards, ” said bill author Assemblymember Calderon. “This is especially true in light of the Covid-19 pandemic, as public and private resources become even more limited for our students.”

For low and middle income families, financial factors are a leading determinant in college selection. In California, 56% of students at public institutions come from families earning less than $40,000 annually. According to The Institute for College Access and Success, California students graduate with an average loan debt of over $21,125.

As the bill’s co-author Mia Bonta put it, “Private scholarships should supplement, not supplant grants, tuition waivers or stipends provided by institutions of higher education to students who have a proven financial need. Limiting a student’s ability to pay for college can have significant consequences, including postponing graduation or dropping out of school, and goes counter to everything the Legislature has been doing to make a college degree financially attainable.”

AB 288 focuses on students like Jason Vazquez, who are losing out on critical scholarship dollars that they need to bridge the gap between the cost of college and their financial aid funds.

Ending scholarship displacement has bipartisan support in the Legislature because it’s an issue that can impact any student who needs financial assistance to attend college. AB 288 bans scholarship displacement for over 1 million low-income college students in California.

We urge the Legislature to pass, and the governor to sign this bill so students — our future leaders — can be confident that they’ll be able to keep their financial aid AND their hard-won scholarships.

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Nadja Jepsen is the senior financial programs and scholarships director at College Track, a college access, persistence and equity organization. 

Sbeydeh Viveros-Walton is the founding director of higher education at Public Advocates, a civil right legal organization committed to eliminating disparities in opportunity for marginalized communities and ensuring that all students have access to a quality education.

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