Maryland Bans Scholarship Displacement at Public Colleges

on April 19, 2017

Maryland Gov. Larry Hogan signed into law legislation April 18, 2017, limiting the use of scholarship displacement at Maryland public colleges and universities. The new law goes into effect on July 1, 2017.

 

Scholarship displacement occurs when a student’s receipt of a private scholarship leads to reductions in the student’s institutional grants. When a scholarship is fully displaced, the college’s net price remains unchanged, yielding no net financial gain to the student. 

 

Public colleges and universities in Maryland will no longer reduce institutional grants when a student receives a private scholarship, except in limited circumstances. Private scholarships can be displaced by reducing institutional gift aid in the following situations:

  • The scholarship is awarded by a private organization that is affiliated with the college and asks the college’s assistance in selecting recipients
     
  • The student’s total gift aid from all sources exceeds the student’s financial need. The college can displace the private scholarship only to the extent needed to reduce total gift aid to equal the student’s financial need.
     
  • The college received approval from the private scholarship provider.
     
  • The college must reduce a student athlete’s institutional gift aid to comply with NCAA financial aid restrictions.
     
  • The college is required by federal law or regulations to reduce institutional gift aid.

The legislation limiting scholarship displacement passed both chambers of the state legislature with strong bipartisan support. The legislation was introduced after Maryland colleges and universities displaced scholarships awarded by state legislators to their constituents, who were upset when their awards were displaced.

 

The Maryland legislation will serve as model legislation for other states that are considering passage of similar legislation.

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