Scholarship Providers

How to Keep Scholarship Providers in the Game—and Off the Sidelines

Scholarship ProvidersHow can scholarship providers hand out need-based awards to college students if they can’t objectively confirm the need? This year, the Department of Education issued guidance that makes information sharing between institutions and scholarship providers impossible. So, now, the National Scholarship Providers Association (NSPA) and supporters like CampusLogic are asking ED to reconsider their guidance. Amy Glynn weighs in—and offers a few suggestions for dealing with “scholarship gridlock” in the interim.  

By Amy Glynn, VP of Financial Aid and Community Initiatives

Scholarships Support the ABCs of Student Finance

At CampusLogic, we focus on three guiding principles to help shape the future of student financial services. They are: Accessibility, borrowing, and cost. We call them “the ABCs of student finance.” It is our belief that every new regulation, initiative, or interpretation should take into account increasing accessibility to higher education, reducing student borrowing, and lowering the cost of higher education.

One way to achieve all three goals is by improving access to, and utilization of, external scholarships. So, last January, when we reviewed new guidance from the Privacy Technical Assistance Center (PTAC) on the subject of data sharing between financial aid offices and external scholarship organizations, we were quite concerned.

As college costs increase, the number of students who count on scholarships increases, too. With more than two-thirds of all college students borrowing money for school today, we believe the use of external, vetted scholarships is one of the best ways to reduce student debt and keep students in class.

A Disservice to Students, Schools, and Well-Meaning Scholarship Providers

The PTAC guidance states that financial aid offices are no longer allowed to share FAFSA/ISIR information with external scholarship organizations. Such data can only be used for application, award, or administration of aid awarded under Federal Student Aid programs, state aid programs, or aid awarded by eligible institutions. This guidance also impacts sharing data with tribal organizations that are trying to manage and award their scholarship and grant funds. Institutions are prohibited from sharing student information even if the student has signed a FERPA waiver requesting that a school release data on their behalf.

Such interpretation is having an impact that goes far beyond the intention of the PTAC, because the ability for external scholarship and grant organizations to allocate and disburse funds to students has now come to a standstill. As it is, the Institute for Higher Education Policy estimates that approximately $100 million in private scholarships goes unclaimed each year. It’s likely that this PTAC guidance is already leaving even more money on the table, because many scholarship providers awards are based on financial needs—which can’t be objectively determined without seeing FAFSA data.

It is for this reason that we are proud to endorse the National Scholarship Providers Association Letter to the U.S. Department of Education. We are certain there is a way to designate scholarship providers as trusted entities that are eligible to receive FAFSA data—and manage it responsibly—per existing statute.

Suggestions for Ending Scholarship Gridlock

In the meantime, we encourage schools to consider these ideas for sharing student information in a way that may alleviate the current scholarship gridlock:

  • Generate a form that a student can fill in with all information necessary for a scholarship organization to award and disburse funds. On the form, include a section where a financial aid officer can certify the accuracy of the student-reported information. Because the student is supplying the information, and the school official is merely certifying the accuracy of the information, the school is not releasing any confidential information to a third party.
  • Create a financial aid summary for students that can be generated upon request and delivered to the student. It should contain all relevant information students might need as part of their college funding journey. This summary could be delivered as a secured, sealed document that can’t be adjusted by the student. Make it available upon request by the student—or automatically delivered to all aid applicants. Doing so would enable students to understand their financial aid package and explore alternative funding options.

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