Many families think the financial aid process ends once a student accepts a financial aid…
Financial aid comes in several forms. Some are more helpful than others. These various aid types are separated into two categories: gift aid and self-help aid. As you can probably imagine, gift aid is the kind you want – it is essentially free money. On the other hand, self-help aid is more than likely what you will receive the most. Self-help aid is the kind you are expected to work for one way or another. Student loans are perhaps the most well-known form of self-help aid, however (where eligible) federal work study financial aid programs can be a much better choice.
How Financial Aid Works
What is a work study job? Work study is a less well-known form of aid. Unlike student loans, there is a perception that work study financial aid is not as widely available. While it is true that not all students qualify for work-study plans, the ubiquity of student loans is somewhat of a misnomer as well. To better conceptualize the qualifications for both federal student loans and federal work-study, a deeper understanding of how aid is divvied out is required.
Based on your family’s financial circumstances you are given an aid package by the school of your choice. This package is designed to get you from what they think you can afford to pay (your expected family contribution or EFC) to their estimate of the actual cost of attendance for that year (need). As explained earlier, your need is met by combining gift aid, i.e., grants and scholarships, and self-help aid, i.e., student loans and work study financial aid. The confusion arises from the fact that more often than not, the combined aid packages come up short, leaving what is known as unmet need, usually creating the need for additional student loans. These additional loans should not be confused with the federal student loans you qualify for via your award letter.
Federal Work Study or FWS is a program where the federal government in conjunction with the school will offer various part-time positions specifically set aside for work study students. These positions are usually on campus in a dining hall, dormitory, or bookstore, though there are also qualifying off-campus offerings.
As you must demonstrate the need to qualify for Federal work study financial aid, most lower to lower-middle income families will likely be offered the program as part of their financial aid package. Moreover, middle income families who specifically ask for it while filling out FAFSA seem to get it as well.
How Federal Work Study and Regular Part-Time Jobs Differ
From a labor standpoint, Federal work study financial aid is no different from any other part-time job. If your student looks for a job independently, they won’t have to worry about income qualifications, and technically they will probably make more cash-in-hand money.
However, that is where the benefits end. The benefits of FWS are numerous, starting with an all-but-guaranteed position, which is particularly helpful at a time when finding a job is often easier said than done.
Undergraduate students will at least earn the federal hourly minimum wage which is currently $7.25. This may seem low (because it is) and is definitely lower than many state minimum wages (including Illinois); however, the benefit comes from the fact that income earned from FWS is not assessed when filing for future aid. A student can earn $2500 over the protected $6260 without any damage to their EFC. The same cannot be said for regular part-time jobs and, considering how stiffly student income is assessed, a regular part-time job can end up doing more harm than good.
Holding a job while maintaining a full class load isn’t for everyone; whether you qualify for work study financial aid or not. If the stress of handling both is too much for your student, you are under no obligation to accept a work study position. The caveat to that being – as work study financial aid is considered part of your self-help aid; short of renegotiating your award, you will be left with more unmet need to come up with – usually via loans.
Federal work study financial aid wages can either be put in an account that will allocate the funds to pay for tuition and fees or given directly to the student. This means that while work study is considered financial aid, if you are not vigilant it can become pizza-and-clothes aid. Be sure to work out with your student how best to allocate the funds for your given situation.
If the prospect of holding down a job and maintain a full course load doesn’t faze your child, another option could be a Co-operative Education program or Co-op. Co-ops offer a hands on learning experience, ideally in your child’s chosen field of study. Additionally, Co-op earnings are excluded from financial aid assessment so long as you correctly report them on the FAFSA question related to “earnings from work under a cooperative education program offered by a college.” Co-op paid internships will usually pay more than regular part-time jobs, especially more than FWS positions and often turn into full-time jobs upon graduation. Because of this, the work load is usually much more strenuous on top of already being a full-time student, and all the additional income can really damage your EFC; some programs do not accept financial aid at all.
While Federal work study financial aid is far from gift aid, it can be a great help. My College Planning Team’s funding team can help you understand your financial aid award and how to make it work best for you. Click here to schedule a complimentary consultation with our team.