Amherst doesn’t require students to take out loans, and in some cases can make exceptions on summer earnings expectations for needy students who get unpaid internships, Parker said.
‘Universities Profit’
While displacement has been around for years, scholarship providers are concerned it may become a larger problem if colleges become more strapped for money, said Amy Weinstein, executive director of the NSPA, whose members collectively grant more than $1 billion each year.
The financial-aid money that schools save doesn’t always go directly to other needy students, and can be used to fund other parts of a college’s budget, said Griffith, of the Gates program.
“Universities profit from attracting talented kids who bring scholarships in tow,” said Michael Mallory, executive director of the Ron Brown Scholar Program, which funds high- achieving, low-income African-American students.
In the Dell Scholars’ first two years, about 60 percent of recipients reported some form of displacement, said Oscar Sweeten-Lopez, director of the Austin, Texas-based program that began in 2004. If recipients have to take on loans, they can defer their scholarship and use it toward loan repayments, he said.
“That’s a solution, but it still doesn’t address the problem,” Sweeten-Lopez said.
An ‘Oversight’
Winston-Salem State University gave De’Jana Parker, 19, of Harvey, Louisiana, a scholarship covering all educational costs, including tuition, fees, room and board and a $250 book voucher each semester, according to a March 2011 letter to Parker, now a sophomore and biology major.
Once the university was notified Parker was a Gates recipient, it rescinded some of its own funding, Griffith said. Parker said she was dismayed by the North Carolina school’s change in award, which was fully made up by Gates.