I heard from someone in college that the amount of money you make from working in highschool is taken out of the financial aid money you are given. Is this rumor true?
The amount of money that a student earns from working in high school may be taken into consideration when any need-based aid is calculated, depending on other factors. However, even if it is taken into consideration, it will never be a dollar-for-dollar reduction. In other words, it will always be to your benefit to work, because any financial aid reduction due to your income will only be a fraction of what you earn.
It depends on a lot of factors.
First of all it depends on parent income.
If it’s too high to qualify for financial aid, then the student working is not going to change that.
If it is low, it might not affect FAFSA EFC because if certain conditions are met, then student income and assets are not counted.
Also, the student gets an income protection amount of around $6,000, before any of it affects EFC.
If the money is saved in a regular checking or savings account, it counts as a student asset and might be assessed 20% towards FAFSA EFC.
The student can spend some on college expenses before filing FAFSA.
Also, if a college student has a federal work study job in college, that income won’t count against FAFSA EFC.
You are correct. When we met with a professional college financial advisor he explained that student’s earnings count as an asset. Discouraging isn’t it since no amount a high school student can earn makes a significant dent in college cost. We also learned that if a student was to work rather than go to college out of high school, the money made will only “count against you” for financial aid. The system is broken. Cash is king…JMHO.
- If students makes less than 6k, it will most likely have no impact on student contribution
2 the overwhelming majority of the over 3000 colleges in The US do not meet 100% demonstrated need. In these types of situations where or not the student works will pretty much have no bearing on the financial aid package
- Most Schools that meet 100% demonstrated need will ask for a contribution from summer earnings. This can be up to $4,000. If the student does not make the summer earnings the college will not make up the difference.
Income and assets are separate things.
The money a student has in a bank account is an asset. This is assessed with no allowance.
The student’s earnings are only assessed after an allowance amount of 6420 after taxes.
If you earn less than 6420 and spend it all, there is no change in your financial aid. Earnings that are sitting in a student’s savings account on the day they file the FAFSA are assessed, at about double the parent rate. (Saving money for a college computer? Buy it before you file the FAFSA.)
You can read the formulas here:
https://studentaid.ed.gov/sa/sites/default/files/2017-18-efc-formula.pdf
@Empireapple <<< student’s earnings count as an asset.>>>
NO they don’t.
Student’s SAVINGs will count as a student asset. However, if a student were to earn - say $4k per year - and have none of it in a savings acct when you file FAFSA, then it will have NO EFFECT on anything.
Students can earn about $6k per year w/o any effect. However, anything in savings at time of FAFSA filing will be a student asset, so the student can either prepay for somethings…or put the money into a 529, and then it counts as a parent asset (much less of a hit…about 6%).
I think you misunderstood the financial advisor…either that or he was wrong.
Student earnings count as INCOME.
Money in the bank on the day of FAFSA filing is a ASSET.
As noted, a student can earn about $6000 a year and it won’t affect financial aid at all.
If the student has money on the day he or she files the FAFSA, that is considered an asset…and will be assessed at 30% of its value when calculating the FAFSA EFC.
What do you mean by this:
Financial aid is for students who need it. If you have assets then that money can be used for education expenses. My kids and I worked hard during high school and college years to earn as much as we could to pay for school. Discouraging to labor 40 hours a week in a cafeteria kitchen all summer and 20 a week during school years and not have much spending money? Of course. But it got me through school.
Why do people see it as being punished for working instead of having pride inpaying their own way? I don’t get it.
My assumption is “cash is king” is that anything paid in cash for work done is not always identified as income or assets. A kid who mows lawns, walks dogs, babysits most likely isn’t claiming those monies.
But you are supposed to claim the cash payments, so it’s not a good idea to advise a student not to. Not many high school students are making over the $6200 allowed before income has in impact on the EFC. It’s the saved money (assets) that might change the EFC.