Dirty Little Scholarship Secrets (And How To Avoid Them)

Did you know that colleges can actually take scholarship money away from students? It’s called DISPLACEMENT, it’s a common practice, it’s highly unethical, and it makes my blood boil more than just about anything else (except MAYBE Maury Povich). What’s worse is that they can take money they said they’d give to YOU and give it to someone else instead. The money you bring in from outside awards/scholarships DISPLACES (or replaces) any awards the school has said it would give you. And often, students don’t even realize this until very shortly before they start school, which can put them in a very difficult financial situation.

Here’s how it works: 

Let’s say that someone (like my daughter, for example), works hard to get a $20,000 outside scholarship to help pay for her VERY expensive education. One of the colleges she considered offered her $30,000 in financial aid. Tuition, room and board were $55,000 per year. So logically, she should have had to pay just $5,000 for her freshman year. Great, right? NOPE.

The school takes the money they said they’d give you and SUBTRACTS the amount you bring in “from outside”, which tosses the funds you would have received back in the pot/endowment/whatever. To add insult to injury, this particular school told her that the only way her outside scholarship would be applied toward her net cost AT ALL was if she earned OVER $30,000 in outside scholarships. In other words, she would have to MATCH what the college gave her in financial aid, and ONLY THEN would they apply a single dime toward her tuition bill. SO. SO. WRONG.

Colleges should not have the right to take a student’s promised funds and give it to another student. This discourages students from applying for outside scholarships and discourages philanthropists from awarding grant money to students in need.

BEFORE you accept admission on May 1st, PLEASE check with the financial aid department to make sure your scholarships/outside aid will actually be applied to your tuition bottom line! Fortunately, not all colleges work this way – make sure yours doesn’t! College is expensive enough!