YESSHECANCAMPAIGN/ DISSCHOLARED FILES U.S. DEPARTMENT OF EDUCATION RULEMAKING PETITION TO BAN SCHOLARSHIP DISPLACEMENT PRACTICES NATIONWIDE

YesSheCanCampaign/DISSCHOLARED filed a petition for rulemaking with the U.S. Department of Education, requesting that the agency amend its regulations to allow need-based financial aid recipients to make full use of all outside scholarships and grants that they have earned. 

Scholarship award displacement is when one form of student financial aid (i.e., federal scholarships, federal grants, state scholarships, state grants, external scholarships, military benefits, tuition waivers, and/or any other type of outside aid) replaces another form of student financial aid for example, an institutional scholarship or grant. The outside scholarship and grant can also impact a student’s federal loan and/or work-study package. Institutions are also practicing hidden scholarship award displacement, taking account of outside scholarships, grants, and aid while developing financial aid packages. This practice forces students to acquire additional student loan debt or drop out of their postsecondary institution. 100% of postsecondary institutions funded by the U.S. Department of Education practice scholarship award displacement in some form. 100% of students who receive financial aid are victims of scholarship award displacement. Postsecondary institutions have misled students by advising them to apply for scholarships and grants while penalizing them and forcing those same students into student loan debt. These institutions have taken advantage of the federal overaward policy by partnering with private loan lenders and scholarship programs to lure more students into institutional, federal, and private loans after they have earned outside scholarships and grants. 

The practice of scholarship award displacement is a direct violation of The Higher Education Act and Title VI of the Civil Rights Act of 1964. 

The petition requests a number of amendments not limited to, dismantling scholarship award displacement practices nationwide, termination of the student loan program, creation of a new scholarship and grant program, and creation of a new automatic student loan debt discharge program for all students who received financial aid and/or were impacted by scholarship award displacement. 

To learn more about our work to dismantle scholarship award displacement, please visit www.disscholared.org. 

A copy of the rulemaking petition can be requested by emailing disscholared@yesshecancampaign.org.