California To Ban Universities From Cutting Financial Aid For Students With Private Scholarships

Sources: Forbes and Cal Matters

Scholarship Provider Association

Students who worked hard, got good grades, and applied for a ton of scholarships should not have to worry about losing financial aid for their efforts. All too often, students receive an outside scholarship and later discover that the grant and scholarship money their college awarded them has been reduced.

Starting next year, California students from low-income families won’t have to worry about losing financial aid because they gained a scholarship from an outside organization. A new law recently passed by the California legislature will prohibit a practice known as scholarship displacement.

California is one of five states in the U.S. with such laws, and only the second in the nation to bar scholarship displacement at both public and private colleges and universities. 

It’s difficult to quantify how many students scholarship displacement affects, or how much money they lose. But a 2013 study by the National Scholarship Providers Association found that 20% of colleges nationwide reduce institutional grants when a student earns a private scholarship, even if a student still has demonstrated need. Advocates for low-income students say the practice can be a significant barrier to college affordability.

The new law, passed by the Legislature in August and signed by Gov. Gavin Newsom, will allow the most vulnerable students who are able to secure additional funds for post-secondary education to have more freedom in how they use their funds. 

The Cal State Student Association worked with advocacy groups to pass the law, and the California community college system signed on in support. Scholarship providers, frustrated that their funds were not always reaching the students who needed them, also weighed in.

Scholarships play an integral role, not only with increasing access, but reducing student loan debt and this new law will ensure that those students most in need will not lose their critical private scholarship funds.

The scholarship displacement ban does leave out some students, however: those who aren’t low-income enough to qualify for Pell Grants or the California Dream Act, but still might have financial need. 

The bill has limitations, and it doesn’t apply to everyone so students will still need to be informed about the issue so they can monitor their financial aid packages and ensure colleges are complying.

IOScholarships urges students to apply for scholarships instead of incurring student debt. To apply for scholarships, use IOScholarships free scholarship matching tool. Every dollar you win is about a dollar less you’ll have to borrow. Apply today!

To get more information on how to win scholarships read the following article:


IOScholarships Partnered with National Scholarship Providers Association to Introduces the NSPA Exchange During National Scholarship Month


National Scholarship Month, sponsored by the National Scholarship Providers Association (NSPA), is a national campaign designed to raise awareness of the vital role scholarships play in reducing student loan debt and expanding access to higher education.

To celebrate, the National Scholarship Providers Association (NSPA) has announced the launch of the NSPA Exchangethe first and only scholarship metric database.

Thanks to a partnership with the Michael & Susan Dell Foundation, the NSPA Exchange was created to serve as a central access point for scholarship provider data. Currently, the database is home to metrics from over 1,300 organizations, allowing members to search details about peer providers by location, compare scholarship award amounts, eligibility criteria, program staff size, and more. All information is kept in a secure, cloud-based, centralized database maintained through a custom administration system.

“Our goal for the NSPA Exchange is to ultimately define best practices and industry standards for scholarship providers.” says Nicolette del Muro, Senior Director, Membership and Strategic Initiatives at NSPA.

“With this database, members now have the data they need to make strategic decisions. For example, of the over 15,000 scholarships in the Exchange database, the average application is open for 90 days. And 75% of these scholarships open in the months of November, December, and January. This offers applicants a relatively short window of time to apply for all scholarships. Insight like this could help a provider determine to open their application outside of the busy season or encourage them to make their scholarship criteria and requirements available online in advance of the application open date.”

“The NSPA Exchange is a great resource for IOScholarships as the information is constantly updated and enables members to review and update their own organization’s scholarship data”, said María Fernanda Trochimezuk, Founder of IOScholarships and Individual Affiliate Member at NSPA. “IOScholarships also uses scholarships from the Exchange in our own Scholarship Search, and we trust these scholarships are safe for students”.

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California To Ban Universities From Cutting Financial Aid For Students With Scholarships