Explaining California's New Scholarship Displacement Law

Scholarship Displacement Affects Many Students in California


Tykia Warden, Executive Director at the San Mateo County Community Colleges Foundation, summarizes the recent California Ban on Scholarship Displacement Act and explains its impact.

The California Ban on Scholarship Displacement Act of 2021 (AB 288) is a new piece of legislation that affects California's public and private institutions of higher education. The act aims to prevent a practice known as "scholarship displacement" from happening in the state.

Scholarship displacement occurs when a student's financial aid from their college or university is reduced because they have received private scholarships. The new law prohibits public and private institutions that receive or benefit from state-funded financial assistance, or that enroll students who receive state-funded student financial assistance, from reducing a student's institutional gift aid below their financial need, except in specified cases.

The act defines "financial need" as the cost of attendance minus the expected family contribution or student aid index. "Institutional gift aid" is defined as gift aid paid for by the institution and awarded by the institution. "Private scholarship" is defined as financial aid awarded by a private company, foundation, or nonprofit organization, based on factors such as academic merit, talent, or area of study.

The California Ban on Scholarship Displacement Act of 2021 is meant to ensure that private scholarships supplement, rather than replace, gift aid, grants, scholarships, tuition waivers, and other forms of institutional financial aid provided to California students with financial need.

In short, this new law is designed to help make sure that California students are able to make full use of private scholarships, without having their institutional financial aid reduced. Due to the high cost of living in the Bay Area, this will have a tremendous benefit to all of our students.