Work-Study Federal Student Aid
By Joe Messinger, CFP®
August 4, 2017
Work-study federal student aid…what is it and who can take advantage of it?
When today’s Gen X parents were college students, they could earn enough money through their own work and employment to make a serious dent in their college costs. Recently, one parent (a cattleman) told us he sold 10 cattle and paid for all 4 years of college at the Ohio State University!
Of course, we know those times have changed! In 2015, a student would need to work 2,229 hours at a $7.25 per hour job to pay off one year of college. That’s more hours than the average full-time employee will work in a year. Of course, they also attend school and study (approx. 1,020 hours). Not enough hours in a day for all that.
Working part-time will not make the dent it used to but consider this…
For every $10,000 in student loans, you pay approximately $100 per month after graduation. By working part-time during school and on breaks, you could contribute $2,500 per year towards your tuition. You lowered your student loan amount by $10,000! $100 per month means something to a 22-year-old getting their start in life!
Sound good? Work-study may be an option to fill gaps where outside employment used to be the answer if you qualify.
What is it?
Work-study is a federal program providing part-time jobs for undergraduate and graduate college students with financial need. It is available to both full-time and part-time students who attend institutions that participate in the government program.
This program has several key provisions you need to be aware of:
- Tuition and housing costs are not reduced on the front end. Students are paid a stipend directly for their hours worked as they work them. Payments are usually made directly to the student.
- Qualification for work-study is need-based. Families must complete the FAFSA each year.
- The financial aid award letter will include work-study if you qualify, but you are not guaranteed a job. The college may not have enough openings for everyone.
- The letter will indicate the limit of work-study money you are eligible to earn over the term of your work that semester.
- You are not required to accept a work-study offer.
- Your college will consider your class schedule and academic standing when assigning work hours.
- Some positions may not be on campus. Some jobs may be off campus with other non-profit employers.
- Wages must be at least equal to the higher of either the federal minimum wage or the state minimum wage.
Tips for taking advantage of work-study:
- Fill out the FAFSA as soon as possible each year. Early applicants have a better chance of scooping up available funds.
- Visit the financial aid office first thing each semester to find out about available positions and the process for applying for them.
- Earnings made from work-study jobs are not taxable if you are a full-time student and work less than part-time.
- As students advance in their academic standing, they can earn higher hourly wages. Sophomores may earn more than freshmen, juniors may earn more than sophomores, etc.
Thinking about a high-priced college?
Work-study may fill a gap particularly at expensive schools. If your family’s EFC (expected family contribution) is $45,000 per year and the cost of the school is $50,000, work-study may be an option for covering the difference.
Why should a student choose work-study rather than regular employment?
Work is work so why choose work-study when a student could get a normal job. Because of the impact on their financial aid application and other benefits.
Wages earned from work-study are NOT included in student earnings assessed by the FAFSA. Regular employment wages will be subject to a 50% assessment after the first $6,350.
(A special tip for small business owners…be sure to read our blog about employing your child.)
In addition, colleges consider your classes when scheduling your hours whereas a regular employer may not. Finally, jobs on campus will save on commute time and costs.
Work-study is not for everyone.
Students must demonstrate a financial need and be able to manage their time.
But working during college can give students an advantage when looking for jobs after graduation. They’ll gain very valuable skills and tools that employers are seeking in their applicants. In addition, studies have consistently shown that students who work during college have better grades.
A key “to do”…
Have the college money talk with your student early on. Help them understand what they are expected to contribute towards the cost of college each year.
If it fits your student, work-study is something to consider when looking at the entire paying for college puzzle.