How to reduce award displacement

During our webinar yesterday "Tips & Tricks for Working with Financial Aid" we shared a list of ways to reduce award displacement curated by National Scholarship Providers Association (NSPA)


We hope you find the below list helpful, and continue adding ways that you are helping students to navigating working with financial aid.

  1. Provide scholars with financial literacy, financial aid literacy and award displacement training
  2. Ask students to complete a FERPA waiver form so that the provider can advocate on their behalf
  3. Use professional judgment to adjust the EFC and/or COA (e.g., to cover health insurance, child care costs)
  4. Put the name of the student and scholarship program on each disbursement check
  5. Adjust timing of award disbursements to minimize opportunities for award displacement
  6. Negotiate compromises, such as elimination of minimum student contribution for students with exceptional financial need
  7. Allow deferment of scholarship awards to future years, including graduate school, or for other purposes (e.g., summer school, travel, other learning opportunities)


ZachWahrer

Comments

  • Thanks for sharing that @SammieHolzwarth .

    I am curious about #4 - Put the name of the student and the school on the disbursement check. Why both?

    We have put just the school name and include a statement and 'agreement' that the school signs with us states who it is for and how it is to be used. We also not that the scholarship is not to be used to reduce school-based grants. I had been told a number of years ago that if we put the student's name on the check the money could go directly to the student. However, that has potential IRS/tax ramifications.

    Thoughts? @JenniferMariano ? Others?

    I'd also love more discussion on this list and items such as #5 adjusting timing, etc.

    Bettie Stammerjohn

    Executive Director

    Community Foundation of Greene County, Pennsylvania

    ZachWahrer
  • Hi Bettie! Regarding #5, when I was at the Quad Cities Community Foundation, we worked with students to defer awards (sometimes for purposes listed in #7), often just a year or two because of other one-time awards the student had received from their school or other outside scholarship providers. It was more work to keep tabs on them, but worth it to let the student maximize their scholarship awards.

  • Thanks, @DanaBerggren ! I hadn't thought of it that way. It does make a lot of sense. We haven't done that in the past but I think willing to explore that for the future.

    I was also thinking during the webinar - if anyone had a deferral policy they'd be willing to share.

    Bettie Stammerjohn

    Executive Director

    Community Foundation of Greene County, Pennsylvania

  • @BettieStammerjohn About #4: I think she means to add the student name and the scholarship program in the memo line or check stub, not in the payment line. That way each check is clearly identified.

    ZachWahrer
  • Yes. That would make sense. We already do that - put the student name in the memo line.

    But I've heard of some places that actually make the check out to the school and student - so the student has to sign it also.

    Bettie Stammerjohn

    Executive Director

    Community Foundation of Greene County, Pennsylvania

  • We make our checks payable to both the school and the student. But we also allow the student to draw out any over payment on their fee bill. I provide the student with a letter to give the school stating that we agree they can withdraw the funds. The student must pay taxes on the amount.

    Lisa B. Williams

    [email protected]

    [email protected]

    504-849-6078

  • edited September 7

    We avoided displacement by paying the students directly, mailing checks in their name only to their current address, not the school. We let them know if they use it to pay for tuition, fees, books, supplies, and equipment at a legit school, it's tax-free (https://www.irs.gov/taxtopics/tc421). But they have the choice to spend it on room/board, travel to school, etc. knowing that would likely be taxable. We switched 3 years ago, so far so good.

    KaraAdams
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