Senate Bill No. 1112 aims to prohibit institutions of higher education in the state from reducing the financial aid awarded to students due to the receipt of scholarships from private or public sources. The bill allows for reductions only under specific circumstances: if the total financial aid from all sources meets or exceeds the student's cost of attendance, or if the reduction is necessary to comply with financial aid restrictions set by athletic associations for student athletes. This legislation introduces new legal language that defines scholarship displacement and establishes the criteria under which financial aid can be adjusted.

The bill is set to take effect on July 1, 2025, and it is expected to have a minimal fiscal impact on higher education institutions, as it may require them to increase the total amount of financial aid they offer. Currently, there are no state laws governing how scholarship displacement is managed, leaving institutions to create their own policies. The bill mandates that each institution disclose its scholarship displacement policy to students and the Higher Education and Employment Advancement Committee.