Maryland Limits Scholarship Displacement by Public Colleges

A new Maryland law limits the ways that public colleges can decrease financial aid, a practice referred to as scholarship displacement, The Baltimore Sun reports.

The law, which took effect on July 1, places limits on when a college can reduce its own financial aid. Institutions can do so when a student’s aid exceeds the cost of college if colleges get permission from a scholarship provider.

A student who gets a private scholarship after receiving financial aid from a college must report the scholarship money to the institution under federal law. After that reporting, colleges sometimes reduce the student’s financial aid that they provide.

In other states colleges use scholarship displacement to redistribute financial aid to needier students, but students say that practice can be punishment for finding other financial-aid sources.

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