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 find themselves penalized in the aid formulas.

Students don’t get an asset protection allowance, so every dollar in their bank account increases their EFC by 20 cents. While 20 cents doesn’t seem like much, $3,000 saved from a summer job would increase the student’s EFC by $600.

What’s a family to do? Several options, depending on what the money is for.

A Roth IRA fully removes the money from the family’s balance sheet. Roths have the additional advantage that contributions may be withdrawn penalty-free. But there’s a catch: that withdrawal gets reported as income if it happens during a FAFSA income year. Assume the student keeps working, at increasing pay. If she earns $5,000 from a job and withdraws the $3,000 from the Roth IRA, she’s got income of $8,000. The approx. $1500 above the income protection allowance gets assessed at 50% on the FAFSA, resulting in an EFC increase of $750. (Not to mention that giving kids the lesson that it’s OK to withdraw their retirement savings for current needs is not in their best interest.)

Money that’s intended for college may also be put in the parents’ 529 account. Some states, including Oregon, allow the contributor to take a tax deduction even if they aren’t the account owner. Moving the student’s savings to the 529 ensures its availability for college and transfers the money to the parents’ balance sheet, where it’s assessed at 5.64% above the asset protection allowance. And the withdrawal doesn’t get reported as income. In this case, the $3,000 increases EFC by $170 at most.

Families might also choose to have the student pick up more of their own summer and back-to-school expenses, simply to spend the summer income down. What you do after you’ve filed the FAFSA is no one’s business but your own.