The University of Minnesota is giving me a decent amount of financial support this year to pay my tuition bill. A mix of grants and scholarships is allowing me to walk across the Washington Avenue Bridge every day and take a licking from the wind. However, the grants and scholarships the University gave me simply enable me to register and show up to class everyday; my room and board at the luxurious, freshman mecca Territorial Hall was a large, unfunded hole.
Through a bit of laborious searching in the scholarships shed of ancient websites, I eventually filled the hole with outside scholarships, and now I write to you from the T-Hall lounge as I munch on some chicken nuggets from the Centennial Dining Hall.
Many students have done similar things like I have with non-University scholarships, but have faced a discouraging phenomenon: scholarship displacement. It is when a University reduces a student’s aid package by whatever amount they receive in private scholarships. It is this displacement of institutional aid away from the recipient.
The legal reason why the University does so, besides the obvious reason of wanting to make sure it gives out as little as possible money, is that Department of Education dictates that that schools cannot over-award its students with Federal aid.
This displacement can, as Justin Onwenu, student body president at Rice University, writes in the New York Times, create a “Catch-22” to discourage students from pursuing scholarships. Students are highly encouraged to seek out the vast array of scholarships out there — we all heard our guidance counselor in high school say that we could get scholarships for anything like being tall or having red hair — but there is no incentive to do so if students know that Universities will revoke some of their aid.
Such a disincentive would reduce the access to education that private scholarships provide for many people. Unless students find enough scholarships to completely cover their gaps in quality institutional funding, they are left open to displacement. This only rewards the small number of students who manage to go big, rather than the vast majority of students who use their scholarships in a piecemeal way. Every dollar that comes from a loan, and not donor money, to pay cost of attendance is a dollar that collects interests and increases the student’s future financial burden. The removal of the student loan interest deductions in the proposed U.S. House of Representatives tax bill will only serve to further strengthen the financial strain that students will face.
As Onwenu pointed out in the Times, some financial aid administrators object to getting rid of displacement because it lessens their ability to further fund more needy students. He points out a perfectly reasonable middle ground that balances the financial abilities of the University and needs of its students: not displacement, but discounting. If a student were to receive a $1,000 scholarship, the school would only displace $250 worth of aid, preserving $750 in aid.
President Eric Kaler has stated that he is committed to meeting the financial need of students. Reducing the use of scholarship displacement and using a technique like Onwenu’s would demonstrate such a commitment. Minnesota can no longer be one of the highest ranked states when it comes to student debt.