@mom2collegekids this is something I’m becoming concerned and curious about. If the student gets dinged so badly on aid for their own earnings, what balances out that time and effort investment for no net financial gain? Just the intangibles like resume building, having their time more structured e.g. in the summer, and personal development and skill building? All of which are good of course, valuable in their own right. But to have little or no financial upside, basically penalizing the student for working, seems unfair.
Another reason for D to prioritize schools that are affordable with metit aid only. Or do student earnings eat into that as well?
Some schools require FAFSA for consideration of merit aid, so I surmise there is a need-component in the amount of merit aid granted. If I recall correctly, those FAFSA-requiring merit schools are: WUSTL, Northwestern, Carnegie-Mellon, UVA, UNC chapel hill, UMich ← you need to double-check this by looking at the schools’ websites.
re: penalize- no college that I am aware of takes 110% of a student’s savings. If a kid has more assets, he or she has less need (that’s just math). Do you think colleges should REWARD kids who have savings by giving them MORE aid than a kid with no assets?
This is crazy logic.
Thank you for voicing your opinion @blossom. It seems I was imprecise in my choice of words. A person’s time and availability has intrinsic value. If there is no net financial gain for their time invested in working, and they have given up travel, summer programs, or simply some free time, that seems unfair to me.
One time I was employed by a company that was acquired by a larger one. They were going to close the facility I worked in. I was given a choice of two packages: relocation to the headquarters 800 miles away, with the requirement that I transfer within 90 days, or be laid off and receive severance. I had no intention of moving to the new location, so my choices were to work for 90 days, get paid for 90 days, and resign, or work for 0 days and get paid 70 days’ salary as severance. Which do you think I chose?
@ohiovalley16
How much will your student earn? It’s only after a certain threshold,that it counts at all. Most students don’t earn THAT much per year.
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the student gets dinged so badly on aid for their own earnings,
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This needs clarification… A student can earn and spend up to about $6k per year and it won’t hurt FAFSA (don’t know what CSS schools do).
HOWEVER, if a student earns $6k, and has it all in savings when she files FAFSA, then yes, that $6k of SAVINGS will increase EFC. The calculation is HARSH for students and there is no protected amount for savings for students.
So, a student could put their savings in a 529 or some “give” the money to their parents to spend on the child’s expenses, and then the parents pay for various things.
Of course, the amount in savings on the day that FAFSA is filed is the real issue. If a student has $10k in savings, and then buys a car the day before filing, then none gets included on FAFSA.
But getting back to the quote about dinging badly… Students don’t get dinged for simple part-time jobs or internships where they earn up to $6k and spend in on college.
How much is the threshold?
She earns a couple hundred a month during the school year and maybe 2K in the summer
What if the student money are in a joint account with parents but the only funds that goes to this account are student earnings?
Ohio- thank you for your courteous reply. My comment still stands- nobody is getting “dinged” for a couple of hundred a month and 2K in the summer.
And I understand the opportunity cost involved- but it seems to me that kids with cash-flow and/or savings have MORE options and flexibility than those without, even factoring in the time and effort.
The analogy to your adult commuting situation isn’t clear to me. What would an adult (who is presumably responsible for a mortgage, food, health insurance) do without a job- EC’s? Marching Band? President of the Honor Society?
You chose to take a financially more advantageous package- which of course is the rational thing to do. But presumably because it gave you time to find a job closer to home, NOT because you wanted to spend the extra time getting elected to Student Council.
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What if the student money are in a joint account with parents but the only funds that goes to this account are student earnings?
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that is student savings.
There is no protection for student savings, other than putting the money in a 529 or putting the money in parent savings.
However, it sounds like parents’ savings is already beyond the protected amounts so those funds (if put in 529) would get assessed at the parent rate of about 6%.
As for earnings, your D’s first $6k is protected. But it sounds like she’s earning over $12k per year gross.
Any portion of student earnings that is work study is excluded from income for FAFSA EFC calculation.
Yes she does. Good idea about car though.
You mean spend her savings on a car by the day before financial aid forms are filed?
Ballerina…it doesn’t matter where that money is placed. If it belongs to the student, it is supposed to be reported as a student asset.
She would need a car one way or another. We were planning to rotate our old car to her and buy a new one for us. But if we are full pay all this will not make any difference anyway
If students earn more than $6k in a non work study job, colleges only take a percentage of the gross (above $6k), don’t they? So a student who earns $14k would pay 20% of $8k, or $1600? That seems like a pretty reasonable contribution to expect from a young adult.
How does a kid earning a few hundred per month plus a few thousand over the summer get to 12K gross? I read this as $200 per month for 10 months (2K) plus 2K summer equals 4K???
Even if the kid saved every penny… not a single movie out with friends or clothing… that’s 4K saved, not “grossing” 12K per year.
OP- help us with the math.
@blossom sounds like you’re spot-on with the math for my D’s case without my help. Yes, we’re looking at 4-5K per year. Which is less than $6K, and that addresses my concern outright. Sorry for noob questions. And thanks everyone.