The California Ban on Scholarship Displacement Act of 2021 prohibits an institution of higher education from reducing the institutional gift aid offer of a student who is eligible to receive a federal Pell 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, as specified, and prohibits the institution of higher education from considering receipt or anticipated receipt of private scholarships when considering a student who is eligible to receive a federal Pell Grant award or financial assistance under the California Dream Act for qualification for institutional gift aid.
Existing law defines “institution of higher education or institution” as any public or private secondary educational institution in the state that receives, or benefits from, state-funded financial assistance or enrolls students who receive state-funded student financial assistance.
Assembly Bill 3240 (AB 3240) prohibits an institution of higher education from reducing a student’s gift aid if the student 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, except that the gift aid may be reduced by no more than the amount in excess of the student’s annual cost of attendance.
AB 3240 also prohibits considering private scholarships that have not be received by the student for purpose of making an institutional gift aid.
Finally, AB 3240 provides that institutions of higher education are 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.
The provisions of AB 3240 become operative on July 1, 2025.
(AB 3240 amends section 70047 of, and amends, repeals, and adds section 70048 of, the Education Code.)