How Federal Work-Study Works
Many families worry about how to pay for college–and rising college costs drive up the number of families who apply for financial aid. Each year, the U.S. Department of Education awards over $120 billion in federal aid to families based on their financial need. If your family is applying for financial aid, you might receive aid in several different forms. Your final financial aid package could include grants, work-study funds, and low-interest loans, so it’s important to understand the differences between these awards. Work-study, which requires a student to work to fund part of his or her financial aid package, is our focus in this post. We’ll outline exactly how this program works and what you need to know about work-study before accepting your financial aid package. Work-study programs require students to work part-time while enrolled in school. Students are paid directly for their work and can use the money for education-related expenses such as tuition, fees, and room and board, or other general expenses. Like grants, work-study funds do not have to be repaid. Funds are administered by schools participating in the Federal Work-Study Program, so check with your financial aid office to determine if your school participates. Work-study programs are available for undergraduates, graduates, and professional students who demonstrate financial need on the Free Application for Federal Student Aid (FAFSA). Students can be full-time or part-time, but must be eligible for federal aid. This means that you must be a U.S. citizen or eligible non-citizen. You can learn more about the specific requirements on the Basic Eligibility Criteria page of the Federal Student Aid site. In order to maintain your eligibility for the Federal Work-Study Program, you’ll need to make satisfactory academic progress. This definition varies from school to school. However, in general your school’s satisfactory academic progress policy will specify a minimum GPA, a minimum annual number of credits that you must complete, and the frequency of progress evaluations. This program is designed to emphasize civic engagement and to build career skills. This means that, whenever possible, work-study eligible jobs involve service work or will be related to your intended career path. Work can be on-campus or off-campus. Most off-campus jobs will be with a non-profit or a public agency. In these roles, the work performed must be in the public interest. Sometimes, schools will form a work-study partnership with a private, for-profit company. In this case, the companies usually try to provide positions that align with prospective workers’ career paths. Undergraduates are paid for their work by the hour. You will be paid directly by your school, unless you request that the money be deposited into your bank account or applied to education-related institutional charges, such as tuition, fees, and room and board. The hourly rate of pay for work-study jobs varies significantly. You will always earn at least the federal minimum wage of $7.25 an hour, and if the state or local minimum wage is higher in your school’s area, your wages will at least meet that higher minimum. Many students don’t initially realize that money earned through their work-study program is taxable. This means that your net income per hour will be lower than your hourly rate. Some programs do offer tax exemptions, and if you itemize your deductions on your taxes, you can deduct federal work study wages from your tax liability. However, generally you should expect to have taxes deducted from each paycheck or to owe the government when you file taxes. Importantly, federal work study wages are exempt from reporting on your FAFSA. This means that the wages you earn through work-study will not increase your family’s expected contribution to college expenses. The amount of funds awarded to each student through the Federal Work-Study Program is calculated by an allocation formula in the Higher Education Act of 1965. This formula was most recently amended in December 2018. According to Section 442, students will receive a total award according to a set formula. This formula determines the total award given to students in each income bracket by multiplying the total number of students in that income bracket by whichever is less: EITHER (1) the 25% of the cost of attendance OR (2) the difference between the cost of attendance and the expected family contribution. If we break that down, it means that the maximum that a student can earn is capped at 25% of the cost of attendance through work-study. Those whose expected family contribution is high may earn less than 25% of the cost of attendance through federal work-study. When we analyzed a representative sample of 430 colleges, we found that the per-student work-study funds at a majority of schools fall within the $750-2625 range, with the mode at $1125-1500. This means that students with demonstrated financial need usually earn under $1500 from their work-study program, though the exact amount varies with financial need. The federal work-study program is only one source of funding for college. Federal, state, and institutional grants, private scholarships, and student loans are other common sources of financial assistance. For more help navigating the process, don’t miss these CollegeVine resources:
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How Does Payment and Taxes Work?
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Where Else to Look for Financial Assistance
