<p>My son was offered $4000 in work study for the 2014-2015 year. However we are afraid of how this will affect the financial aid for next year. Our income was low enough that the fafsa gave us an option of skipping asset questions. Will his working at the work study increase our "household income" and eliminate the option of skipping the asset questions?</p>
<p>No, it will not. That is one of the benefits of workstudy. Anything he earns from Work study will not count as student income for financial aid purposes. Also if he banks it, and leaves it there, it doesn’t count as a reportable asset. Once he spends an amount that he banks, however, the protected balance is lowered. He can’t put it back. Like if he banks the proceeds each paycheck, and then takes out $150, from there, he can’t replace it with money you give him or for some other place and still bring the amount saved to $4000. So he should track that money carefully and leave a paper trail. If assets are counted next year, it’s a 20% hit on student assets sitting there, so he should spend all other money first before he does the WS money.</p>
<p>He also won’t pay social security on WS pay. But it is reportable income to the IRS/state if it goes over the reportable tax thresholds for him. Also if he gets other financial aid, be aware that any amounts over tuiton/fees/books/covered supplies are also reportable for tax purposes as unearned income. I don’t remember the exact rules and amounts you can have for earned/unearned income and reporting for tax purposes, so you do have to get acquainted with those regs.</p>
<p>For a start, there is no such thing as “household income” on FAFSA. There is parent income and student income. 2 completely separate things. The asset skipping question is based on the parent income (and meeting at least one other criteria such as type of tax return).</p>
<p>As far as the effect of federal work study on the EFC, it does not affect it. Work study income is excluded from the EFC formula. If your son makes enough money to have to file a tax return, the WS income will be included in his (not yours) AGI which would be reported on FAFSA. But there is another question that asks how much of the student’s income is from work study and/or taxable scholarships/grants. It is important to answer this accurately as it is used to deduct the WS and scholarships/grants from the student’s AGI before it is used in the EFC formula.</p>