Added by Stats. 2022, Ch. 925, Sec. 1. (AB 288) Effective January 1, 2023.
This act shall be known, and may be cited, as the California Ban on Scholarship Displacement Act of 2021.
Article 24 - California Ban on Scholarship Displacement Act of 2021
California Education Code — §§ 70045-70048
Sections (4)
Added by Stats. 2022, Ch. 925, Sec. 1. (AB 288) Effective January 1, 2023.
The Legislature finds and declares both of the following:
(a)As of 2020, California students who have financial need and receive private scholarships are unable to make full use of the awards provided to them by private scholarship providers because institutions of higher education reduce their gift aid, grants, scholarships, tuition waivers, and fellowship stipends that those students would otherwise be qualified to receive. The reduction of an institution’s financial aid due to private scholarships is referred
to as “scholarship displacement.”
(b)This act is intended to ensure that private scholarships supplement, and do not supplant, gift aid, grants, scholarships, tuition waivers, and fellowship stipends provided by institutions of higher education to California students who have financial need.
Amended by Stats. 2024, Ch. 851, Sec. 1. (AB 3240) Effective January 1, 2025.
As used in this article, unless the context requires otherwise, the following definitions apply:
(a)An “academic year” is July 1 to June 30, inclusive. The start date of a session shall determine the academic year in which it is included.
(b)“Cost of attendance” means the student’s tuition and fees, books and supplies, living expenses, transportation expenses, and any other student expenses used to calculate a student’s financial need for purposes of student aid programs under Title IV of the federal Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1070 et seq.).
(c)“Expected family contribution” means a student’s expected family contribution
calculated according to the federal methodology pursuant to subdivision (a) of Section 69506 as established by Title IV of the federal Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1070 et seq.).
(d)(1) “Financial need” means, as used in subdivision (a) of Section 70048, the cost of attendance minus the expected family contribution.
(2)“Financial need” means, as used in subdivision (b) of Section 70048, the cost of attendance minus the student aid index.
(e)“Gift aid” means all financial aid designated for the student’s educational expenses, including a grant, scholarship, tuition waiver, fellowship stipend, or other third-party payment, that is not a loan or pursuant to a work-study program.
(f)“Institutional gift
aid” means gift aid that is paid for by the institution of higher education from its funds and the recipient of the aid is selected by the institution.
(g)“Institution of higher education” or “institution” means any public or private postsecondary educational institution in the state that receives, or benefits from, state-funded financial assistance or enrolls students who receive state-funded student financial assistance.
(h)“Private scholarship” means financial assistance awarded to students based on one or more factors, including, but not limited to, academic merit, talent, or a particular area of study, by a private company, foundation, or nonprofit organization, or a public charity or service group. A federal, state, or institutional scholarship, including, but not limited to, financial aid
provided by the Middle Class Scholarship Program established by Article 22 (commencing with Section 70020), shall not be considered a private scholarship.
(i)“Scholarship displacement” means the reduction of institutional gift aid due to private scholarship awards.
(j)“Student” means any California resident that enrolls in any institution of higher education to obtain an undergraduate degree.
(k)“Student Aid Index” means, with respect to a student, an index that reflects an evaluation of a student’s approximate financial resources to contribute toward the student’s postsecondary education expenses for the academic year.
Repealed (in Sec. 2) and added by Stats. 2024, Ch. 851, Sec. 3. (AB 3240) Effective January 1, 2025. Operative July 1, 2025, by its own provisions.
(a)An institution of higher education shall not reduce the institutional gift aid offer of a student who is eligible to receive a federal Pell Grant award, a Cal Grant award, or financial assistance under the California Dream Act for an academic year as a result of private scholarship awards designated for the student unless the student’s gift aid exceeds the student’s annual cost of attendance.
(b)The institution may reduce the institutional gift aid offer of a student who is eligible to receive a federal Pell Grant award, a Cal Grant award, or financial assistance under the California Dream Act by no more than the amount of the student’s gift aid that is in excess
of the student’s annual cost of attendance.
(c)The institution shall not consider receipt or anticipated receipt of private scholarships when considering a student who is eligible to receive a federal Pell Grant award, a Cal Grant award, or financial assistance under the California Dream Act for qualification for institutional gift aid.
(d)To ensure financial aid is maximized, an institution is encouraged to implement efforts to avoid scholarship displacement through consultation with scholarship providers and students to avoid situations where institutional gift aid and private scholarships can only be used for specific purposes.
(e)This article shall not be interpreted or implemented in a manner inconsistent with
state or federal law. The provisions of this article are severable. If any provision of this article or its application is held invalid due to a conflict with federal requirements, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(f)This section shall become operative on July 1, 2025.