Scholarship Displacement: How Outside Scholarships Affect Financial Aid

Scholarship displacement is a little-known phenomenon that can make a huge difference in your financial aid package. Displacement can occur if you receive both financial aid from your institution and a scholarship from another organization.

So, how might outside scholarships affect your financial aid? We’ve put together a guide to help you interpret different colleges’ displacement policies. We’ve also collected information on the displacement policies at a wide range of schools across the country and made them easier to understand. Read on to find out what scholarship displacement is, and how it might affect you.

How does scholarship displacement work?

Schools award financial aid packages based on a student’s demonstrated financial need. When you are accepted at a college, they will send you a financial aid award letter that includes various types of financial aid, including need-based grants, student loans, work study, merit scholarships, and other forms of aid. Most award letters also include your Student Aid Index and the school’s total cost of attendance. Your financial aid package is meant to help bridge the gap between these two figures. Typically, it will not cover the entirety of the gap, but a growing number of schools have committed to meeting 100% of demonstrated need, in which case it would cover the entire gap. 

Typically, when students earn a scholarship from an organization outside of their institution, they are required to report it to the financial aid office. Sometimes, this will not affect their financial aid package at all. But in many cases, the financial aid office will use their scholarship data to recalculate their financial aid package. This can result in a reduction of need-based aid. 

In extreme cases, your need-based aid might be reduced by the exact figure of your external scholarship, meaning that you will be paying the same amount as if you hadn’t earned any external scholarship. 

Merit-based vs. need-based aid

Scholarship displacement has the potential to reduce both need-based and merit-based financial aid. However, most schools will only reduce your merit-based aid if your total sum of scholarships exceeds the cost of attendance. This means that most students are less likely to see a reduction in merit-based aid.

In contrast, need-based aid is much more likely to be reduced. Many schools reduce need-based aid if they find that your total aid exceeds your demonstrated financial need. So, even small external scholarships might lead to reduction in need-based institutional aid.

What does scholarship displacement mean for me?

College choice

So, now you know that students with substantial external scholarships might see a reduction in their need-based financial aid at specific schools. This could make your external scholarships less beneficial or even cancel them out. But what can you do to prevent this?

For students who haven’t yet chosen a college, the best course of action might be to favor a college with a more generous scholarship displacement policy. Some schools have much more rigid displacement policies than others. So, while you might see your need-based aid reduced significantly at one school, it might remain exactly the same at another.

Financial planning

Of course, cost isn’t everything. Some students might be set on a school, and will go regardless of the additional cost. In cases such as these, it’s still good to familiarize yourself with your scholarship displacement policy. You’ll want to know how much you’ll be paying as early as possible so you know how much you’ll need to take out in loans

Are scholarship applications worth it?

If you are a student with substantial need-based aid attending a school with a strict scholarship displacement policy, it might not be worth applying for scholarships. As counterintuitive as this sounds coming from a scholarships website, it’s true!

If you reach out to the office of financial aid and find out that any external scholarship will reduce your need-based aid, dollar-for-dollar, you should not be spending time applying for scholarships that won’t affect your costs. You’d be better off applying for jobs to help earn money to put towards your education.

Interpreting scholarship displacement policies

Every school uses different terminology for their scholarship displacement policies, and these policies can often be very confusing. To help you through it, we’ve narrowed policies down to a few different categories, which we will explain to you here. 

We’ve also assembled a list of scholarship displacement policies from a large sample of schools. So, you can read up on the definitions below and then keep scrolling to find your school and its policies.

External scholarships might cut into your need-based aid immediately

This is the worst scholarship displacement policy for students. It means that you might not be able to put any of your scholarship money towards expenses before it begins to penalize your need-based aid. So, even if you got a $500 or similarly low-award scholarship, you might have your need-based aid reduced by $500, making the scholarship effectively worthless to you. In this situation, your school is the one saving the money, not you.

It’s a relatively rare policy, and some schools may have some wiggle room. So, if you’re planning on attending one of these schools, make sure to call the financial aid office to ensure you are aware of their policy.

Fill in any unmet demonstrated financial need

This policy means that your external scholarship funds will not impact your need-based financial aid package as long as they are equal to or less than the gap between your demonstrated financial need and your financial aid package.

For example, if your school determined that you have $10,000 of annual financial need but only offered you $7,000 in financial aid, your external scholarships would not impact your need-based aid as long as they did not exceed $3,000.

Replace self-help

This policy means that your external scholarship funds will not impact your need-based financial aid package as long as they are equal to or less than the sum of your “self-help” contributions to your education.

The definition of self-help may vary slightly between schools, but it generally refers to student loans, work-study, and the expected student contribution from summer work. Keep in mind, it only refers to student loans taken out directly by the student, not by the parent. So, Parent PLUS loans are not included in this sum.

For example, let’s imagine that a student took out $4,000 in loans, was projected to earn $3,750 in work-study, and was expected to pay $2,000 from summer earnings. Their total “self-help” would equal $9,750. So, their external scholarships would not impact need-based financial aid unless they exceeded $9,750. 

Pay for other school expenses

This policy means that a school allows external scholarship funds to be put towards school expenses, usually a laptop and/or medical insurance, to prevent them from reducing need-based financial aid. Typically, schools have a budget set for a laptop between $2,000 and $3,000. So, under this policy, you can purchase a laptop with your scholarship funds to prevent the school from reducing need-based aid.

If you plan to take advantage of this policy, make sure to read the rules from both your scholarship provider and your college very carefully. Some scholarship organizations may not allow their funds to go towards any expense other than tuition. In cases such as these, it may be possible to put your institutional scholarship funds towards the laptop and/or health insurance rather than your external scholarship. When in doubt, reach out to your financial aid office and your scholarship provider.

Replace family contributions

This is generally the most generous scholarship displacement policy. It basically means that your external scholarships will not reduce need-based institutional aid unless the sum of all of your scholarships exceeds the cost of attendance. In other words, you cannot be pocketing the money from your scholarships.

If a school has this policy, it typically means that you can use external scholarships to replace unmet need, self-help, and family contributions before reducing your need-based aid. It is a relatively rare policy, but the ideal one for a student who has earned a lot of external scholarship money.

Scholarship Displacement Policies at US Universities 

So, how are outside scholarships handled at your college? We’ve assembled a list of colleges from across the country with each of their displacement policies. Read on to get a summarized version of each school’s policy.

Note on the data: We do our best to keep our information current and accurate. However, policies do change. We cannot guarantee that every piece of information on our chart is fully up-to-date. Make sure to check the cited source and be in contact with your school’s financial aid office to be completely sure about their rules.

Amherst College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Augustana College

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Bard College

The Financial Aid Office does not routinely reduce Bard scholarship awards by the amount received through outside scholarships. Any such adjustments are made systematically and equitably.

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Barnard College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution). However, outside scholarships cannot reduce the Summer Earnings Contribution on the financial aid package.

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Bates College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Baylor University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Bentley University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Boston College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Boston University 

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your previously unmet demonstrated financial need.

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Bowdoin College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Brown University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Bryn Mawr College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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California Institute of Technology

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Carleton College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Carnegie Mellon University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Case Western Reserve University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Claremont McKenna College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Colgate University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Colorado College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Columbia University 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and paid for other school-related expenses such as medical insurance and a laptop.

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Cornell University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Dartmouth College 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Davidson College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and Expected Family Contribution, or until they exceed $5,000, whichever comes first.

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Denison University

Outside scholarships will begin to reduce your need-based financial aid immediately.

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Drexel University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need, replaced all self-help (loans, work-study, and expected student contribution), and the entirety of your Expected Family Contribution.

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Duke University 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Elizabethtown College

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Emory University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Florida State University

Outside scholarships will begin to reduce your need-based financial aid immediately.

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Fordham University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Georgia Institute of Technology

Outside scholarships will begin to reduce your need-based financial aid immediately.

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Grinnell College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Hamilton College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Hampshire College

Outside scholarships will not affect need-based financial aid until all unmet need is paid for, as well as all self-help. Hampshire has a more nuanced policy than other schools; check their site for more details.

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Harvard University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Haverford College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Indiana State University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Johns Hopkins University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Kenyon College

Outside scholarships will not affect the amount of grant and scholarship assistance that a student receives from Kenyon if the total amount of outside scholarships does not exceed $10,000 and/or the student’s cost of attendance.

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Lehigh University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Liberty University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need, replaced all self-help (loans, work-study, and expected student contribution), and the entirety of your Expected Family Contribution.

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Loyola University – Chicago

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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MIT

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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New York University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Northeastern University 

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Northwestern University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Oberlin College

Outside merit scholarships will not reduce need-based financial aid until they have replaced all unmet need, self-help, and family contributions. However, outside need-based scholarships will immediately replace need-based financial aid, dollar-for-dollar.

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Pomona College

Outside scholarships will not reduce financial aid until they replace all self-help (loans, work-study, and expected student contribution). Once they exceed this amount, they will be split between reducing parental contribution and reducing Pomona scholarships. So, if you receive $10,000 more in scholarships than your self-help, your parents will be relieved of $5,000 of financial responsibility and you will lose $5,000 in Pomona scholarships.

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Princeton University 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and paid for other school-related expenses such as medical insurance and a laptop.

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Reed College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Rice University 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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San Diego State University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Santa Clara University

Outside scholarships may change your financial aid package, but there is no standard procedure in place for these adjustments. Reach out to a financial aid officer to report your scholarships and find out what these adjustments will be.

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Skidmore College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Smith College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and paid for other school-related expenses such as medical insurance and a laptop.

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Stanford University 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Swarthmore College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Syracuse University

Outside scholarships may change your financial aid package, but there is no standard procedure in place for these adjustments. Reach out to a financial aid officer to report your scholarships and find out what these adjustments will be.

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The George Washington University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Tufts University

Tufts will not reduce your financial aid package as long as your outside scholarship does not exceed your need-based loans and/or work study award. After these are paid for, the award will reduce your financial aid, dollar-for-dollar.

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Tulane University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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UNC Chapel Hill

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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University of California, Berkeley

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all unmet need, all self-help (loans, work-study, and expected student contribution), and all Expected Family Contributions.

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University of California, Davis

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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University of California, Los Angeles

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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University of California, San Diego

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your demonstrated need, your self-help (loans, work-study, and expected student contribution), and any loans your parents were planning on taking out.

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University of Chicago

Outside scholarships will not affect UChicago financial aid unless the two combined are more than cost of attendance.

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University of Illinois – Chicago

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your demonstrated need, your self-help (loans, work-study, and expected student contribution), and your Expected Family Contribution.

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University of Illinois at Urbana-Champaign

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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University of Miami

Outside scholarships will begin to reduce your need-based financial aid immediately.

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University of Minnesota 

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your demonstrated need, your self-help (loans, work-study, and expected student contribution), and your Expected Family Contribution.

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University of Nebraska – Lincoln

Outside scholarships will be taken into consideration and could reduce your financial aid package, but there is no posted rule on how this will happen. For more information, reach out to the financial aid office.

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University of North Carolina

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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University of Notre Dame

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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University of Pennsylvania 

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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University of Southern California

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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University of Virginia

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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University of Wisconsin – Madison

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Vassar College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Villanova University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Virginia Technical Institute

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Wake Forest University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Washington and Lee University

Outside scholarships will begin to reduce your need-based financial aid immediately.

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Washington University in St. Louis

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and the entirety of your family contribution. However, they cannot be used to pay for other educational expenses such as a laptop or medical insurance.

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Wellesley College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Wesleyan University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and paid for other school-related expenses such as medical insurance and a laptop.

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Western Carolina University

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your demonstrated need, your self-help (loans, work-study, and expected student contribution), and your Expected Family Contribution.

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Whitman College

Outside scholarships will not begin to cut into your need-based financial aid until they have met all your demonstrated need, your self-help (loans, work-study, and expected student contribution), and your Expected Family Contribution.

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William & Mary University

Outside scholarships will begin to reduce your need-based financial aid immediately.

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Williams College

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution).

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Wittenberg University

Outside scholarships will not begin to cut into your need-based financial aid until they have filled all unmet demonstrated need and replaced all self-help (loans, work-study, and expected student contribution).

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Yale University

Outside scholarships will not begin to cut into your need-based financial aid until they have replaced all self-help (loans, work-study, and expected student contribution) and paid for other school-related expenses such as medical insurance and a laptop.

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