Navigating Shifting Sands: How Scholarship Providers Can Prepare for Potential Financial Aid Disruptions
The higher education landscape is always evolving, but recent legislative discussions around the "One Big Beautiful Bill" highlight a particularly critical moment for student financial aid. Potential sweeping changes including cuts to Pell Grants and other federal aid programs like the Federal Supplemental Educational Opportunity Grant (FSEOG) and Work-Study program; reduced Pell eligibility; not tying Costs of Attendance to actual college costs or local living expenses; ending subsidized and GradPLUS loans; and setting new borrower limits. This is creating palpable financial stress for students and those who support them.
Many scholarship providers–perhaps you included–have just wrapped up their latest scholarship cycles. That makes it an ideal time to pivot from immediate awards to proactive planning.
Now more than ever, we recommend that scholarship organizations build flexibility and foresight into their strategies. While the exact details of future legislation remain to be seen, acknowledging the potential for disruption and planning for various scenarios can make a world of difference for the students you serve.
Whether you’re entering your planning period now or it’s on the docket for later this summer, here are concrete actions to consider to ensure that you’re ready for any potential financial aid crisis.
Acknowledging Student Anxiety and Building Trust
First and foremost, recognize that students are already under immense stress. The uncertainty surrounding financial aid can be overwhelming. You have a unique opportunity to provide reassurance and clarity.
Acknowledge student stress broadly. This means openly recognizing the intense pressure students are facing, not just to them directly, but also among your team, leaders, donors, and the broader community you serve.
Prioritize proactive communication. Don't wait for students to come to you with questions. Proactively send updates more frequently than usual regarding when or how their awards will be disbursed, letting them know you understand their anxiety and are there to answer any questions.
Be a flexible partner. Reassure students that your organization is willing to be flexible. This could mean allowing them to retain their award even if they need to change their school of choice, alter their number of enrolled hours, or adjust their degree program due to financial aid cuts or new requirements.
Designate a clear point of contact. Ensure students know exactly who to reach out to with questions or concerns, ideally a specific staff member or department, rather than a generic email or phone line, providing a sense of stability and direct support.
Host informational or Q&A sessions. Beyond written updates, consider holding virtual or in-person (if feasible and safe) Q&A sessions or webinars. This allows students to hear directly from your team, ask questions in real-time, and feel more connected and informed.
Preparing for Potential Aid Cuts
If the "One Big Beautiful Bill" or similar legislation leads to significant cuts in federal financial aid programs like Pell Grants, students will be facing substantial gaps in their funding. Your organization can be a vital safety net.
Identify and allocate additional funds. Consider setting aside or reallocating funds for general awards or emergency funding that can be deployed if students' existing aid is significantly reduced. This might require revisiting your budget and exploring opportunities to create a contingency fund.
Guide students to other resources. Be a resource for students seeking additional funding. Provide information on where else they can look for support, such as state-based persistence grants, institutional emergency aid programs, or other private scholarship opportunities.
Review and adjust awarding criteria. With potential changes to federal aid eligibility (like increased credit hours for Pell or reduced FSEOG), reassess your own scholarship criteria. Ensure they continue to effectively identify and support students who are most impacted by federal aid reductions, perhaps by refining income thresholds or prioritizing specific student populations.
Proactively engage in financial literacy and counseling. Beyond finding more funds, equip students with the skills to manage their finances effectively. Offer or partner with organizations to provide workshops on budgeting, managing debt, and understanding financial aid packages, especially if repayment options or loan types change.
Strengthen partnerships with college financial aid offices. Establish clear communication channels with the financial aid offices at institutions where your scholars enroll. This allows for real-time information sharing on how federal changes are affecting shared students and enables more coordinated, targeted support efforts.
Conduct scenario planning and modeling. Internally, model different legislative outcomes to understand the potential financial impact on your scholarship recipients. This strategic foresight can help your organization anticipate needs, adjust fundraising targets, and prepare for various levels of student financial gaps.
Adapting Your Organizational Policies
Some of the most impactful changes might require adjustments to your organization's internal policies and procedures.
Seek Board approval for flexibility. If your existing scholarship agreements have strict requirements (for example, specific majors, full-time enrollment), fast-track discussions with your Board of Directors. Obtain approval to allow students to retain their awards even if other existing aid cuts prompt changes in their enrollment status or academic path, as this flexibility is paramount in a volatile financial aid environment.
Activate emergency and persistence funding. If your organization has plans for emergency funding or persistence grants that have been on the "five-year plan back burner," now is the time to pull them forward. Get these programs up and running ASAP to provide immediate relief to students in crisis.
Formalize emergency and short-term aid criteria. Beyond just activating funds, develop clear, transparent policies and eligibility criteria for emergency grants or short-term aid. This ensures quick, equitable, and compliant disbursement when students face unexpected financial shortfalls due to federal changes.
Re-evaluate definitions of "unmet need" or "gap funding." With potential changes to federal aid formulas and caps, your organization's internal calculation of a student's financial "need" may no longer align. Adapt your policies to define how your scholarships will account for new federal aid landscapes, ensuring your funds truly fill critical gaps for students.
Establish clear policies for changes in enrollment or status. Create or update policies regarding leaves of absence, reduced course loads (for instance, if full Pell now requires 15 credits), or changes in degree programs. These policies should aim to allow students to retain their scholarship eligibility under unforeseen circumstances driven by financial necessity, preventing them from losing support when they need it most.
Review scholarship agreement language. Proactively audit and update the formal scholarship agreements or contracts provided to students. Ensure the language clearly reflects any new flexibility regarding enrollment, funding adjustments, or emergency aid access, providing legal clarity and reassurance to scholars.
Staying Informed and Student-Centric
To truly understand the impact of potential legislative changes, engage directly with the students affected.
Establish a student advisory committee. Consider establishing a paid student advisory committee. This committee can provide invaluable real-time insights into how financial aid measures are affecting students on the ground, ensuring your planning remains relevant and responsive to their needs.
Actively monitor policy developments. Beyond relying on student input, dedicate resources to closely tracking federal legislative and regulatory changes related to student financial aid. Subscribe to updates from higher education associations, government agencies, and policy analysts to anticipate changes and understand their nuances.
Train staff on evolving policies and student impact. Ensure all relevant staff members, particularly those directly interacting with scholars, are well-informed about potential federal aid changes and their implications. Provide training on how these changes might affect students' financial situations and how your organization's updated policies can provide support, fostering empathetic and accurate guidance.
Implement systematic impact assessment. Develop methods to collect data on how financial aid policy shifts are actually affecting your scholars. This could involve tracking changes in enrollment patterns, retention rates, reported unmet needs, or student feedback on financial stress, providing concrete evidence to inform future adjustments and advocacy.
Share insights with stakeholders. Regularly communicate your findings and insights about the student experience and the impact of policy changes with your Board of Directors, donors, and broader community. This transparency underscores the urgency of your work and helps justify the need for flexible policies and additional funding.
Considering Broader Strategies
As you prepare for potential federal aid shifts, think strategically about how your scholarship can integrate into the wider financial ecosystem, securing your organization's resilience and maximizing student support in the long run.
Explore 529 plan implementation. For organizations looking to maximize the impact of their scholarships and potentially mitigate scholarship displacement, talk with us about exploring how your awards can be integrated with 529 college savings plans. This can offer a strategic way to ensure your scholarship dollars go further for students and aren't inadvertently absorbed by institutional aid reductions.
Diversify and strengthen your organization’s funding sources. In an unstable financial aid climate, relying on a limited set of funding streams can be risky. Develop and execute strategies to broaden your donor base, explore new grant opportunities, and cultivate a robust mix of individual, corporate, and foundation support to enhance financial resilience and the opportunities you make possible for students.
Engage in informed advocacy and thought leadership. Leverage your insights into student need and the impact of policy changes to contribute to broader discussions around higher education funding. This could involve sharing data, participating in sector-wide initiatives, or even issuing public statements to advocate for policies that better support students.
Prioritize long-term financial sustainability. Review your organization's endowment management, investment policies, and overall financial models. Develop robust long-term financial plans that account for potential federal aid volatility, ensuring your organization can continue its mission effectively for years to come.
Build alliances and coalitions. Connect with other scholarship providers, non-profit organizations focused on education access, and higher education advocacy groups. Sharing knowledge, resources, and best practices within a collective can amplify your impact and provide a stronger voice in policy discussions.
The coming months may bring significant changes to federal student financial aid. By taking a proactive, flexible, and student-centered approach to your planning, scholarship organizations can play an even more critical role in ensuring students can access and persist in their higher education journeys, even amidst uncertainty.
Need further support in navigating these potential changes? We’re here to help. Schedule a free 30-minute consultation with our consulting team to discuss your organization's specific needs and explore strategies for preparing for the future of student financial aid.
