Bill That Would Stop Scholarship-Driven Financial Aid Reduction Introduced in Assembly

On Monday, a bill that would prevent colleges and universities from reducing financial aid if a student is given one or more private scholarships was formally introduced in the Assembly.

Assembly Bill 288, authored by Assemblyman Rob Bonta (D-Oakland), would prohibit both public and private colleges and universities from pulling or reducing institution-based financial aid if the students receive state-funded financial aid. The bill, also known as the California Ban on Scholarship Displacement Act of 2021, also specifies that any reduction cannot go below the financial need of the student.

Assemblyman Bonta wrote the bill to combat scholarship displacement, the action of colleges removing or reducing financial aid to the equivalent or percentage of money received through scholarships. Bonta cites the growing need of students during the recession to help low-income students not lose scholarships.

“As California students struggle with how to achieve their dream of earning a college degree, we must not punish students who are fortunate enough to receive a private scholarship,” explained Bonta. “This is a common practice known as scholarship displacement. During this economic recession, it’s even more urgent that we help low-income students who may have no other means to pay for the complete cost of colleges.

“The cost of attending college is more than tuition, fees, and books,” said Bonta. “And we know the full cost is much higher than the typical financial aid award. A small scholarship can make a big difference and keep a student on track to graduate instead of being forced to drop out.

“When a college education is lauded as one of the greatest ladders out of intergenerational poverty, it is painfully ironic when financial barriers keep lower-income students from accessing this very ladder. AB 288 will make a positive difference for students who are doing all they can to pull together funding to secure their dream of attending college.”

While other lawmakers have yet to weigh in on the issue, some city leaders and groups such as the NAACP have expressed support for the plan.

“Allowing students from low-income families to maximize every dollar they are awarded in scholarships and grants can be the tipping point that enables them to eat breakfast before a final exam, or buy books on time for their first class. That can make the difference between dropping out or graduating” Oakland Mayor Libby Schaaf said. “This bill brings us another step closer to equity and is a true example of the power of public-private partnerships. I’m excited that students will be able to leverage every public and private dollar they win toward the completion of their college degrees.”

Flaws with AB 288

However, many others have come out against the plan.

“They might think this is helping scholarship winners, but in reality this would hurt many more,” explained Justin Carmona, a member of two foundation boards that award scholarships in Southern California. “Colleges do this not to harm the student that got the scholarship, but to give others a chance.”

“Say a student got a scholarship at a state university with in-state tuition. Right now that’s roughly $14,000. And let’s say that student got $10,000 in tuition aid over another student who might now has to resort to loans and FAFSA. Now, let’s say that first student got a $4,000 private scholarship. The school sees this and cuts the aid by $4,000, seeing as it made the difference. So the first student still needs $4,000, but the next student isn’t $14,000 behind, but only $10,000 now.”

“It makes college more affordable for everyone. But if this bill passes, basically, instead of helping out a lot more people, it hurts students who may have been right below the aid threshold.  And the thing is, everyone for this bill says this is a fair thing even though it’s going to leave a lot of students out in the cold having to owe a lot more money.”

“We’ve awarded full scholarships. When accepted, the school takes all that aid it would have given them to another student, rather than let them keep it all.

“Bottom line is that they think this will help low-income students, when in reality, it’s going to harm far more. I have no idea how he thinks that this is even remotely a good idea.”

AB 288 is expected to be brought to committee in the coming weeks.