Maryland Bans Scholarship Displacement by Public Colleges

A new Maryland law limits the conditions under which public colleges may decrease financial aid, disallowing reductions when a student's aid exceeds the cost of college or with permission from a scholarship provider—a practice referred to as scholarship displacement, The Baltimore Sun reported.

Under current federal law, a student who wins a private scholarship after receiving financial aid from a university must report the scholarship to the university. Some institutions then reduce the student's aid by an amount equal to the scholarship.

University officials assert that the practice is intended to redistribute limited financial aid to the students who need it most. However, scholarship recipients argue that it essentially punishes them for finding other financial aid sources.

The new law, effective July 1, places a limit on when a college can reduce financial aid. Maryland is the first state to bar scholarship displacement by public colleges. Though the ban affects only state colleges and universities, state lawmakers are considering plans to try and expand it to private institutions, according to the Sun.


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The Baltimore Sun