Work Study

A financial aid package often includes work-study as one component. Typically the package includes a dollar sum of work-study income to be used for education costs. It’s up to the student to find a qualifying work-study job once they arrive on campus, and there is no guarantee that such a job is available.

Work-study jobs look a lot like regular jobs: They may be on-campus or not, and students are paid by paycheck, not by having the funds directly reimburse the university for tuition or other expenses. They pay at least minimum wage and hours depend on the employer. Earnings are taxable to the student, too.

There are a couple of differences, though: Work-study jobs cannot exceed the income limit in the work-study award. Let’s say your student is awarded $1,500 annually in work-study. After working 10 hours per week at $10 per hour, they will have maxed out the award midway through the second quarter of the school year. The employer may or may not continue having the student work as a “regular” employee at that point and if not, the student who needs to continue earning will have to find another job.

Another big difference is a positive: Earnings from a work-study job are subtracted from the student’s income for FAFSA purposes. That means that a student who has other income sources that put them close to or over the student income protection allowance– such as a summer job or funds coming from someone other than their custodial parent– will not see an EFC increase as a result of work-study earnings. When filling out the FAFSA, the student reports total income first, then work-study earnings under Additional Financial Information; the work-study amount is subtracted from the total.

One question that often comes up is whether a student should seek other employment if they are unable to find a work-study job, or if their work-study job doesn’t offer enough hours. The answer is generally “yes,” especially after Jan. 1 of sophomore year. With the FAFSA’s prior-prior income calculations, the student’s income only matters for FAFSA purposes up to Dec. 31 of sophomore year (assuming they’ll graduate in 4 years). The primary exception to that yes is a student in the early years of college whose other income sources (job, external money) puts them over the student income protection allowance ($6,570 in the current FAFSA).

Higher Ed Act Reauthorization

The Higher Education Act, which oversees federal financial aid programs, is overdue for a reauthorization. The House education committee, led by Rep Virginia Foxx, R-NC, is about to release a draft proposal called the Promoting Real Opportunity, Success and Prosperity through Education Reform (PROSPER) Act. According to Inside Higher Ed, the proposal includes significant changes in several key areas: Continue reading Higher Ed Act Reauthorization

FAFSA Custodial Parent

For divorced parents, figuring out who is the custodial parent for FAFSA filing purposes can be a little confusing. Actually, the rules are pretty simple: the custodial parent is the one with whom the student spends the most time. That’s not necessarily the parent named custodial parent in the divorce decree, or the one claiming the student on their tax return. Continue reading FAFSA Custodial Parent

Outside Scholarships

Outside scholarships are those that come from someone other than the federal government or your school. Examples include National Merit Scholarships, scholarships from your or your parents’ employers, or from other civic institutions. Although these scholarships can be very valuable, there is a big difference between them and institutional grants coming from your school: You have to report them on your FAFSA or Continue reading Outside Scholarships

Tax Reform Bill and College

The tax bill that was finally introduced last week impacts higher education in a number of ways, most of them negative for students and families. Here is a quick summary:

Education tax credits: The bill slightly expands the American Opportunity Tax Credit but eliminates the Lifetime Learning Credit. While the AOTC is more generous than the LLC ($2,500 in tax credits for $4,000 in qualified expenses for the AOTC vs $2,000 in Continue reading Tax Reform Bill and College

Operation “Game of Loans”

You may have seen news this year about Operation Game of Loans, a crackdown by the Federal Trade Commission and 11 state attorneys general on student debt relief scams. Dozens of bad actors are accused of having collected close to $100 million in bogus fees that were marketed to student loan debtors as debt relief programs. In addition, they often falsely promised to help reduce or eliminate student loan debt and misrepresented themselves as affiliated with the Department of Education or other government agencies. Continue reading Operation “Game of Loans”

What to do with Summer Job Money?

The change in the FAFSA’s timing from winter to fall has some potentially unforeseen consequences. One is student summer jobs. Even at minimum wage, a student who worked full-time for the summer may have earned $3,000 or more. Students who saved their summer income with the intent to spend it over the course of the school year may Continue reading What to do with Summer Job Money?