Commonplace or a Painful Practice?

A group of students at Morehouse College who recently learned they would not be getting scholarship funds they expected and believed they were entitled to receive are demanding change and clarity about the institution’s scholarship policies. They want college administrators to explain how external and internal scholarships are factored into the individual costs, per student, of attending the university.

Morehouse financial aid officials can reduce students’ institutional scholarships if the students receive external scholarships that exceed their on-campus expenses, such as tuition and room and board costs. The policy has been particularly problematic for students living off campus whose housing costs are not covered by Morehouse scholarships.

Ayden Clark-Veal is one of those students. When he was accepted to Morehouse, he was excited to receive a $12,500 annual merit scholarship that would help him pay for tuition and other on-campus expenses. He also got some external scholarships and a Pell Grant, federal financial aid for low-income students.

Clark-Veal, now a sophomore, received a nearly $4,000 refund in September, as leftover scholarship funds he’d been eagerly expecting. He used the money to pay rent for his off-campus apartment and other expenses. Six days later, he got a call from Morehouse financial aid officials asking him to return the money and explaining that he and a couple of other students had received refunds by mistake.

“They said it was a system error and we would be accountable for making up for that mistake,” Clark-Veal said. “All of those funds were already designated to expenses, prior to actually receiving it, so there was no possibility of me paying it back at that time.”

The letter Clark-Veal received congratulating him on his Morehouse scholarship said the academic award would apply first toward tuition and mandatory fees, and that any external funds received would cover other on-campus expenses, such as student housing or meal plans. But the letter didn’t explicitly say in what order internal and external scholarships are applied to tuition, and that information isn’t visible on his account, Clark-Veal said. His internal scholarship, unlike some of his external scholarships, is nonrefundable. He assumed his entire internal scholarship would be applied to tuition, and any external scholarship funds remaining would be disbursed to him and could be applied to his off-campus costs. Instead, external funds were applied to his tuition. And since he has no on-campus housing, the institutional scholarship was simply reduced—in effect, part of it was taken back.

Marcus Beason, also a sophomore at the college, was in for a similar surprise. He went to the financial aid office recently hoping to pick up his refund check, which he said his account showed the college owed him.

But he was told his scholarship awards, internal and external, exceeded his cost of attendance and he would not be getting a refund as a result. He chose to live off campus this year because he wasn’t sure he could get on-campus housing due to the priority given to the large freshman class. He also wanted to save money and was hoping to use the refund check to pay off next semester’s rent, as he did last year.

Beason fired off a mass email to several hundred students and some staff members that day urging students to contact and set up meetings with campus leaders and even the college’s accreditors about the issue. He also created a group chat for those who had been similarly affected by the policy that now has more than 60 members. He believes the policy as it stands is “unfair” and should have been better communicated to students in advance.

“I don’t want them to sweep it under the rug,” he said. “Morehouse is a good school, but it gets to a certain point where I feel as though, as a student, we’re being taken advantage of. The communication between the students and the administration—it has to change. I want to know what’s going on in the school if I’m paying a certain amount of money to be here.”

Undria Stalling, Morehouse’s senior vice president of business and finance and chief financial officer, said institutional scholarships are nonrefundable tuition discounts that can only cover campus costs.

“Morehouse institutional scholarships, designed to assist students in meeting the direct cost of attending the College, are tuition discounts and are not the same as external scholarship awards, which are funded,” she said in a written statement. “As unfunded tuition discounts, these awards are not eligible for cash refunds. If recipients of these awards receive additional external funded scholarships designated for tuition and mandatory fees, then the institutional scholarship will be applied to on-campus housing and meal plan charges, where applicable. This institutional scholarship policy has been in place since the 2019 academic year.”

“On limited occasions of calculation errors, we’ve worked with students and their families to rectify their status,” she added. “Our goal is to educate students and families on the financial aid available to them and to assist in ensuring they have a solid financial plan in place to cover their cost of attendance. This is an area we are improving upon.”

She also said that “there could be a number of reasons why students receive refunds one year and not in the next year or in differing amounts,” and the college would need to review each case.

Cameo Clark, Clark-Veal’s mother, said her son received refunds both semesters of his freshman year without issue, so it’s unclear what changed. The two of them started a GoFundMe page to help other students who may have been expecting refunds on external scholarships with off-campus rent payments.

“If I’m misinterpreting something, they need to make it clear,” she said. “If I don’t feel like it’s clear, I know it’s not clear to any of these other parents.”

A Common Policy

Morehouse is hardly alone in this scholarship funding practice.

Mark Kantrowitz, a financial aid analyst and former board member of the National Scholarship Providers Association, said students at Morehouse are calling renewed attention to “scholarship displacement” practices. (The term is generally used by the practice’s critics.) About 20 percent of colleges and universities nationwide uphold the practice, and he finds it’s most common among private colleges. He also cited a national survey by Student Beans, a marketing and technology company focused on student discounts, which estimated that about 50 percent of students receiving private scholarships had institutional funds reduced by their institutions.

Five states now have legislation barring the practice. California passed a law this year banning scholarship displacement for low-income students at public and private colleges.

Kantrowitz says the practice is unfair to students and to scholarship providers who want to give students money on top of their institutional grants to cover unmet financial needs. He noted that there are regulations under which the federal government requires colleges to make sure students aren’t overawarded funds, receiving more need-based aid than their cost of attendance by several hundred dollars. He said college officials should be transparent with students about those cases. Institutions also have other options, such as including costs that go beyond tuition and room and board in their calculations of the cost of attendance. They can also reduce campus-based aid, federal funding awarded to institutions to disburse to students, instead of internal scholarships.

“[Historically Black colleges] have been complaining about how their alumni are more likely to graduate with student loans and more [debt] than students at other colleges because they have been historically underfunded,” Kantrowitz said. But students with leftover costs and displaced scholarships are likely to have to take out loans “to make up that difference,” which can affect their career trajectories and upward mobility.

Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, said he couldn’t speak to what’s happening at Morehouse. But in general, scholarship displacement is a “not uncommon” way for colleges to shift institutional resources to the students who have less outside financial help.

“Any scholarship displacement is an unfortunate practice ultimately created by too much need and not enough resources for students,” Draeger said. “Most colleges just don’t have enough money to meet the full need of their students, so they’re constantly weighing the resources that different students bring to the table, and if they find out one student is bringing more resources, they might try to reallocate those funds to another needy student.”

Reduced scholarship funding may be a “painful process for families to go through,” but he sees the practice as a symptom of institutions not having enough money to go around.

Clark-Veal’s ordeal at Morehouse has been stressful. He said he dropped a class this semester because of the stress caused by the unexpected debt. That put him at risk of losing the rest of his Morehouse scholarship, which requires him to maintain a 2.75 GPA and take at least 30 credit hours of classes per year. He plans to take an extra class next semester to keep up with the requirement.

“We feel not as valued as we should be,” he said.

His mother added that there isn’t enough housing at Morehouse for all students to live on campus, so it’s unfair that students living off campus who receive external scholarships are effectively penalized for doing so.

Stalling, the Morehouse administrator, acknowledged that on-campus housing is in short supply but said Morehouse is taking active steps to help students with their living costs.

“The demand for on-campus housing continues to rise since the return to campus in the pandemic amid Atlanta’s growing population, the increasing housing market costs in the City of Atlanta, especially in our rapidly gentrifying Westside community,” she said. “In addition to emergency funding that may be available and has been provided to several students to help cover living expenses, the College is exploring additional measures to assist with off-campus housing costs as well as campus living expansion in the future.”

Beason nonetheless feels he and the other affected students are being punished for successfully earning outside awards.

“We shouldn’t be penalized for receiving scholarships,” he said. “That’s kind of how it feels. It’s uncalled-for, unfair and it shouldn’t happen.”