Confused about Scholarship Displacement Policies?

I'm a junior exploring scholarships and just heard about scholarship displacement. How does it work? Can it reduce my total financial aid package, and should I be worried if I get a lot of external scholarships?

Scholarship displacement, sometimes referred to as "over-award," can indeed impact your financial aid package. Here's how it works: federal guidelines require a school to consider all aid a student receives, including external scholarships. If these added up exceeds your total Cost of Attendance (CoA), the college is required by law to reduce their aid package to prevent an "over-award".

Usually, your school will first try to reduce your self-help aid (work-study and loans) before they touch any grants or scholarships. However, policies vary from school to school. Some universities may reduce their own grant aid before reducing federal loans or work-study allotments.

On the bright side, external scholarships can help reduce your financial burden by replacing loans in your aid package, reducing how much debt you have upon graduation. I would still recommend applying for as many external scholarships as you can!

Just be sure to check each college's policy on scholarship displacement. Some colleges are 'friendly' to outside scholarships, meaning they'll use them to reduce your loans or work-study before using them to replace institutional grants. That's definitely an important point to consider when deciding where to enroll. If you're unsure about a school's financial aid policies, it can be helpful to contact their financial aid office directly.

Remember, all financial aid (including external scholarships) should be reported to your college's financial aid office to prevent any complications down the line. So keep doing your best and seeking scholarships—it can make a big difference!