A new law prohibits scholarship displacement at Maryland’s public colleges and universities.
The state is the first in the nation to pass legislation limiting the practice, which can spur financial aid reductions for students who are awarded private scholarships.
“Under federal law, a student who wins a private scholarship after receiving a financial aid package from a university must report the scholarship to the university,” according to a Baltimore Sun article about the new legislation. “Some universities then reduce the student’s aid by an amount equal to the scholarship.”
Maryland’s new law significantly limits the conditions under which institutions can decrease a student’s financial aid package. Reductions remain permissible when the student’s aid exceeds the cost of college or with permission from the scholarship provider.
Jan Wagner and Michele Waxman Johnson—who oversee a scholarship program serving Maryland students—pushed for the change, calling it “a matter of equity.”
“For someone who went out and beat the bushes and pounded the pavement and submitted applications to try and get additional grants and make college affordable, the net result of their efforts is zero,” Wagner said of scholarship displacement. “That’s unfair. Especially when we’re talking about low-income and middle-income students.”
Officials at many colleges, however, see the practice as a way to make postsecondary education affordable for more students.
By decreasing aid for scholarship winners, “we can put that money to use helping another student who may not have that resource,” Dennis O’Shea, a spokesman for Johns Hopkins University (MD) told The Baltimore Sun.
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