Mitigate Award Displacement

• Establish a priority order that requires institutions to reduce unmet need before loans, loans before student employment and student employment before grants, similar in concept to the regulations that establish an order for the return of unearned Federal Title IV aid. Alternatively, mitigate displacement by striking the references to scholarships and fellowships in the definition of estimated financial assistance and various coordinating restrictions or increase the over-award tolerance from $300 to $1,000.
• Stop indirectly taxing 501(c)(3) scholarship providers by taxing private scholarship awards made to students. Congress should allow scholarships to be used tax-free for the full institutional Cost of Attendance (COA), not just for tuition, required fees, books, supplies and equipment.
• Establish a mandatory standard for financial aid award letters or eligibility determinations for all Title IV eligible institutions (e.g., the Financial Aid Shopping Sheet developed by the US Department of Education and the Consumer Financial Protection Bureau).
• Expand the definition of COA to include other common college costs, such as the cost of a computer and student health insurance.
• Allow the EFC to go negative when the family income falls below the subsistence level as reflected by the income protection allowance.
• Impact of Award Displacement on Students and their Families (Executive Summary)