Scholarship Displacement: What is it?

Hey guys, I've come across the term 'scholarship displacement' but I'm not sure exactly what it means. Can someone explain how this works, whether it's something I should be concerned about, and how it might affect my financial aid package in college? Thanks in advance!

Hi! Scholarship displacement refers to a situation where a college reduces the amount of its own need-based financial aid due to the scholarships you receive from external sources. The overall financial aid package could either remain the same or decrease, despite getting an additional scholarship. While policies on scholarship displacement differ from college to college, it's essential to understand the implications before applying for and accepting external scholarships.

Here's a simple example: let's say your financial aid package consists of $10,000 in need-based aid from the college and you secure an external scholarship for $2,000. Some colleges might reduce the need-based aid they provide by that same $2,000, effectively “displacing” the external scholarship. As a result, your overall aid would remain at $10,000 instead of increasing to $12,000.

It's important to check each college's scholarship displacement policies to understand how external scholarships impact your financial aid package. Some colleges have a policy in place to use external scholarships to first reduce the student or parent's contribution before affecting their own need-based aid. In these cases, external scholarships can help to further reduce out-of-pocket expenses.

To address any potential scholarship displacement, first, contact each college's financial aid office to learn about their policies. Clearly communicate your situation and gain an understanding of how the college accounts for external scholarships in your financial aid package. Knowing how potential scholarship displacement affects you can help you make an informed decision about which external scholarships to pursue, leading to an optimal financial aid outcome.

In general, keep seeking external scholarships to reduce your overall college expenses. Just be aware of scholarship displacement policies at each college you're interested in and how it may affect your overall financial aid package. Good luck!