Assembly Bill 486 aims to establish restrictions on the reduction of gift aid offered by institutions of higher education in Wisconsin when students receive private scholarships from Wisconsin-based entities. The bill defines "gift aid" as financial aid that does not require repayment, including grants and scholarships, and specifies that a "private scholarship" is one valued at $5,000 or less. Under the proposed legislation, institutions may only reduce gift aid in specific circumstances, such as when a student's total gift aid exceeds their financial need or to comply with athletic association regulations. Institutions are also required to inform students of their right to request a reassessment of their financial need before any reductions are made.

Additionally, the bill mandates that institutions make a sincere effort to contact private scholarship providers to request adjustments that would allow for more flexible application of the scholarship funds to a student's cost of attendance. The private scholarship provider is not obligated to comply with these requests. The bill applies to the University of Wisconsin System, Wisconsin technical colleges, and private nonprofit institutions that are part of the Wisconsin Association of Independent Colleges and Universities.