College affordability advocates push for a ban on scholarship award displacement at all New Jersey universities

College affordability advocates in New Jersey are calling on the state to ban scholarship displacement at all higher education institutions.

Scholarship award displacement occurs when “receipt of a private scholarship leads to a reduction in other forms of financial aid, such as college grants,” according to Forbes.

In 2021, New Jersey became the second U.S. state to ban the practice at public universities under certain circumstances. Zaniya Lewis, founder of #YesSheCanCampaign, said state lawmakers should pass a bill that extends the ban to private universities and proprietary institutions.

“Scholarship award displacement is one of the root causes to the student loan debt crisis,” Lewis said. “These universities are now penalizing students for winning scholarships, and then they’re making them have to pay more out of pocket.”

Fifty-six percent of U.S. college students receiving private scholarships experience award displacement, according to research at the University of Massachusetts Amherst. Universities argue that the practices “provides them with the flexibility to creatively figure out which top students need aid the most and allocate it accordingly.”

Lewis said she fell victim to the practice in 2019.

“I won a scholarship from the Taco Bell Foundation. And when I submitted the check to my university, they decreased my institutional scholarship by half, they increased my federal loans, and eliminated my work study,” Lewis said. “I had to pay over $15,000 out of pocket and it gave me two choices, whether to drop out of college or get a private loan.”

Michele Johnson has advocated for a ban on scholarship displacement for nearly a decade. Johnson was behind Maryland’s push to get rid of the practice, becoming the first state to do so in 2017. She supports efforts in New Jersey to extend the ban to private universities.

“Sometimes students do not even notice until they get a bill that they have an unpaid balance,” Johnson said.

Advocates also said schools are not always transparent about the practice.

“One of the most effective ways that we found in spreading awareness of this practice is word of mouth, whether that’s casual conversation with families, friends, colleagues, peers. We also host information sessions and other educational workshops for family, students, or professionals,” said Michael Woods, a #YesSheCanCampaign consultant.

Sen. Troy Singleton (D-Burlington) introduced the amendment bill last month. It awaits hearings in the Senate and General Assembly Higher Education committees.