Scholarship award displacement could reduce your student aid

Your financial aid letter might be one of the best pieces of news you get. After months of scraping and digging, you’ve managed to put together a patchwork of scholarships that, with the institutional aid you are already getting, can help make college affordable. Imagine the rude surprise that awaits the poor students who open that letter only to see that their institutional aid has been reduced on account of those private scholarships they’ve worked hard to earn.

This can happen because of something called scholarship award displacement. Many colleges consider private scholarships in their internal aid calculations, so these scholarships represent money they don’t have to pay. Don’t think you’re safe just because you’re already at school, either. Many institutions make financial aid renewal decisions assuming all private funding is renewable. If you had a one-time scholarship, for instance, your financial aid package may have been reduced because there was an assumption that you’d get that scholarship every year.

If your financial aid package is shrinking, it may seem like there’s nothing you can do about it, but don’t give up yet. Here are three ways you can make up for displaced financial aid.

1. Find out what’s displaced

The good news is that some colleges will replace loans and work study funding with private money first. Trading loans for aid is a good idea, since that will mean you’ll need to repay less after graduation. You may want to take another look at your options for federal work study money, though. If losing access to that funding means losing out on campus work opportunities, it could set you back. Work study jobs may provide valuable experience in your field and are flexible enough to work around your course load most of the time. It might be worth pursuing other strategies if that’s the case.

2. Look for a workaround

Many colleges have “mandatory student contribution” expectations. They want their students to have some skin in the game, so they’re not getting “free” college. If your college is part of the group that replaces grants and non-repayable aid with private assistance, this may be part of the reason. However official these policies sound, your college or university may be willing to work with you, Ask your college financial aid office if it can waive the requirement. If you encounter reluctance, explain that it would only be for the duration of your private scholarship. This may make the office more receptive to the idea.

3. Put it off

If there’s one lesson you’ve learned as a college student, it’s the power of procrastination. It can work for you, at least with scholarship money. Get in touch with your scholarship provider and ask them to defer payment of the award. You may have more significant financial needs, like course-specific fees, in future years.

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