Will having a summer job hurt a student’s chances for financial aid?
That’s a question that a lot of families wonder about. Today I’m sharing a guest post from Kenneth O’Connor, who is director of student advocacy at CUStudentLoans.org, which is an umbrella organization of credit unions that offer college loans. His post will answer the jobs question.
If you’d like to read even more on this topic, I wrote this post recently for my CBS MoneyWatch blog: Can a Summer Job Hurt a College Student’s Financial Aid Chances?
By Kenneth O’Connor
Student income does factor into financial aid eligibility. Most students are completely unaware that their personal income and assets are weighed more heavily than parents income and assets on the Free Application for Federal Student Aid or FAFSA. Here is what you need to know about student jobs and financial aid:
Student income counts on the FAFSA.
This is a tough fact to deal with, especially when students are looking to earn extra money. The FAFSA already accounts for parent income substantially, but it also weighs student income as high as 50% towards the 
estimated family contribution.
If parents have low income, student earnings can have a major impact on financial aid.
As crazy as it sounds, earning money can hurt a student’s chances of receiving financial aid. However, if the parents have income high enough to eliminate financial aid eligibility, it will not make a difference if the student works or not.
This article is not meant to discourage anyone from work, but rather to understand how student income can affect financial aid eligibility. Students from low income households need to know how best to manage the limited financial aid made available, especially during tough economic times.
Know the “income protection” cutoff.
The Department of Education recognizes the dilemma facing students from low-income households. If they work and earn income, it could be disproportionately weighed against financial aid eligibility. As a result, the FAFSA has set up an “income protection allowance”. This allowance shields a portion of income from the financial needs analysis, and is not counted towards the expected family contribution or EFC. However, any income earned beyond the income protection threshold is counted towards the EFC at a substantial percentage.
For the 2013-2014 academic year, the FAFSA’s income protection for dependent undergraduate students is $6,130 from 2012 earnings. (Source: Page 14, line 39 Dept of Ed EFC Calculation Guide)
So if you are starting college this fall, it’s too late to adjust any earnings from the 2012 tax year, however summer 2013 earnings will impact the 2014-2015 academic year FAFSA, and this number is expected to be slightly more than $6,130.
The 2013-2014 EFC Formula Guide is available online, and provides the equations used by financial aid administrators to determine the Expected Family Contribution (EFC). It clearly states that the dependent student income protection allowance is $6,130, meaning that earnings below this number will not harm financial aid eligibility, but any earnings above that amount may weigh heavily against financial aid eligibility.
An ideal summer job situation would earn income just to meet the $6,130 income allowance benefit and no more. Students need to be aware of their earnings and plan accordingly. As long as earnings remain below the cutoff, the student is safe.
Does Work Study Jobs Impact Financial Aid?
Does work study jobs hurt financial aid chances? The good news is that these campus jobs don’t jeopardize financial aid. The money you earn in a work-study job is not included on the FAFSA. Students can’t qualify for campus work-study jobs unless they qualify for need-based aid. A student won’t have any chance at one of these jobs without completing the FAFSA.
Bottom Line:
Because work-study jobs aren’t counted and students can earn up to $6,130 during the year, most students don’t have to worry about ruining their financial aid chances by working.
I’m at a year long internship and will be earning $9,200 for the year, how much will it affect my financial aid for the next school year?
what is protection cut off for 2016?!?
The amount that undergrads can earn for the 2016-2017 school year without hurting financial aid chances is $6,400.
Lynn O’Shaughnessy
HI there. I have a simple question. If I get a job next summer and earn about 4k dollars will it have an impact on my financial aid at all? My parents have a very low income so I want to help my off my loans. Thanks
Hi Daniel,
No a summer job earning $4,000 won’t hurt your financial aid chances.
Lynn O’Shaughnessy
Hi Lynn,
I just have a quick question. I’m a dependent student and my parents together make about 52k. I get a little under $5000 in financial aid (1.7k from pell grant, 1.4k from state grant, 2k from school grant) per semester that fully covers my college’s tuition. I was offered an internship this summer that will pay $7200 that is over the $6310 income protection allowance. I am just curious on how big of an impact going over the allowance will affect my financial aid. I was thinking about requesting them to reduce my pay to the point i meet the threshold of $6310. Do you think it is worth reducing the pay?
Hi my name is Brianna and I have an important question that no one seems to be able to answer. I am very worried about making too much this year. I live with my mother, who make zero dollars a year working, because she receives SSD. Last year I made about $3000 working my summer job. This year, I’m working all your round and a summer job. Do I have to make under $6310? Or because my mom is not eligible to file for income tax and makes no money working; does it matter how much I make? Thank you so much, I cannot find anyone else to answer this question.
I applied for fafsa as a dependent student as I am 17; and will be attending my first year of college this fall.
Hi Brianna,
I think you can make more than the ceiling when your household is very low income. I would call the FAFSA hotline and ask them this question. Here is the link to the FAFSA hotline: 1-800-4-FED-AID (1-800-433-3243)
Good luck!
Lynn O.
Hello
i applied for fafsa as a dependent student for my freshman year of college.
now i live alone and cover my own expenses through financial aid and loans.
so now i will apply as an independent student and i would like to ask:
will working 18h per week for $12 per hour impact my financial aid?
as i said before i am not receiving any help from my parents.
and if it’s not 18 how much can i work without having my financial aid drop a lot.
PS: my parents income was VERY low when i applied for fafsa
Hi Eli,
If you are an unmarried undergraduate who is under the age of 24, it makes no difference if you are living on your own and paying your own expenses. You still must report your parents’ income. If their income is very low, however, it won’t make much of an impact on your financial-aid prospects.
There are strict federal rules about who can be considered an independent. Here are the requirements to qualify:
https://studentaid.ed.gov/fafsa/filling-out/dependency
You can make $6,310 in the 2015-2016 school year without it hurting your chances for financial aid.
Good luck.
Lynn O’Shaughnessy
Hello, Lynn. I had just turned 18 about 3 months ago and I have multiple questions. I have completed one semester of college and received financial aid (was paid about 460). I am living with a single mother and 2 other siblings. I am wondering if i work a part time job, would it affect my chances of receiving financial aid? She is struggling, yet i believe it may be hard for her since she is working as a nurse.
HI Ayel,
Working will not impact your chances for financial aid as long as you don’t make more than $6,310 for the calendar year of 2015.
Lynn O’Shaughnessy
My son wanted to work on campus, but he was told they only offer work study. However, he does not qualify for aid per the FAFSA. If there are available jobs and less students to fill them, could you still fill a position there? I’m thinking the answer is no.
HI Jean,
My son was in the same boat. Since Ben didn’t qualify for need-based aid during his junior year he lost his work-study job. He’s going to be in the same boat his senior year. It’s a question parents should ask schools. Are all the jobs tied up in work study or are positions available for other students?
Lynn O’Shaughnessy
Terrific information, and very nicely explained. I would only add that work is looked upon favorably in the admission process so there is more to be gained than lost in summer employment. The perfect storm is a job that pays just under $6000 in a field about which the student is passionate: win-win-win for student-admission officer-FAFSA!
Lynn always has great content on her site!
Hi Lynn,
Two related pieces of information are very important to understand when discussing student income from a summer job…
First, it’s important to note that if a student earns $6000 in the summer and saves the money, instead of using it for COA (or other) expenses that year, that money will be assessed at as a student asset at either 20% (FAFSA) or 25% (CSS) if it’s still sitting in the student’s bank account when they file for financial aid the following year. Many people are not aware of the double hit to financial aid eligibility from earning income that is subsequently saved.
Secondly, it’s important to point out that while the federal methodology (FAFSA) provides a $6130 income allowance for students, there is no income allowance at all for schools that use the CSS Profile and institutional methodology. So, a student who earns $6000 for a summer job will see a $3000 reduction in financial aid eligibility at a CSS school. The good news about this, however, is that most CSS schools already incorporate a student summer earnings expectation of $2000-3000 as a starting point for the student expected contribution, so the earnings may in most cases cause a negligible incremental increase in EFC.
Thanks Rich. You are right. The post didn’t cover the issue of student assets, but my post at CBS MoneyWatch did. Here is the link:http://www.cbsnews.com/8301-500395_162-57592502/can-a-summer-job-hurt-a-college-students-financial-aid-chances/
The student will have to share what assets they have in the bank on the date of the financial aid filing.
And yes the PROFILE schools, there are about 250 nearly all private institutions, assume their students have jobs and assume they will contribute $2,00o to $3,000 for their education each year.
Lynn O’Shaughnessy
Great follow up on this Lynn, assets are a different category than income. Students should basically empty their checking, savings accounts before filing a FAFSA. Better to buy a new smart phone or laptop than get penalized on financial aid eligibility.
How about if a student earns $5000 in the summer, then puts it all in a Roth IRA? Will that money in a retirement account still be assessed as a student asset at 20% or 25%?
Money sitting in a Roth won’t be assessed at all.
Lynn O’Shaughnessy
Hi Lynn,
This is a question which might come up. What if a student had 2013 Work Study earnings of $1,500 in the Spring and earns $6,000 in this summer. His/Her tax return for 2013 will show $7,500 (above the threshold). How does FAFSA take into consideration the Work Study income for 2013?
David,
Work study is never considered for financial aid purposes. It doesn’t matter what year the child had a work study job.
Lynn O’Shaughnessy