Working over the Summer, Even worth it?

Paying for College
1

<p>Hi,
I was wondering what the tax implications are if I were to work over the summer. I would like a job for the experience and for the extra money. Luckily, our family will not have to take out a loan because my parents have money abroad. </p>

<p>With that in mind, what are the disadvantages of having a job? Will it reduce my Financial Aid Package? Would I have to file a tax return? (If I did file, wouldn't that increase the overall family income and prevent me from getting the same aid the following year? Or wouldn't that put money under my name as in assets?) My father thinks there is no point for me to work over the summer, as he sees more negatives than positives. Is this true?</p>

<p>Hearing from others already in college, they said that the summer after senior year should be a time where I should have lots of fun, as I will never have another real summer while in college. At the same time, if I were to have a paid internship, would that help me out in the long run? Please offer an opinion...</p>

<p>Advice would be greatly appreciated.
Thanks in advance.</p>

2

<p>As far as I know, working over this summer will not affect your financial aid package...at least for the first year. It might factor into next year's package, but since the amount you will be earning (I assume) will not be a substantial portion of your family's income, the difference should be quite negligible. </p>

<p>I personally will probably work but not every day of the summer. It is a time to have fun, but having said that, I think I can work during the day and have fun at night with no problem. It simply depends on your personal preference. I also think it is vital to get some work experience before starting your college education, because this may be the only opportunity to learn the value of money by having a "teenager" job. Paid internships if you can get them would probably be more beneficial on a resume in the long run, but If you find a job you like then IMO it's just as well. Good Luck!</p>

3

<p>For financial aid purposes - under FAFSA the first $3000 of a students income is protected. You are unlikely to make more than that in a summer job but if you do - Of income over $3000 50% of a students income is considered available for the EFC. 20% of a students assets are considered available for EFC - but remember that is 50% of the assets on the day FAFSA is filed for the next school year so you will probably have spent most of the summer earnings by then. I think it is definitely worthwhile to get a summer job. My daughter certainly plans to and that plus work study will be her spending money. </p>

<p>If your school does profile - I believe most private schools expect a certain amount of student contribution to come from summer jobs and this is generally reflected in their finaid packages.</p>

4

<p>Keep your total annual income under $3200-- or, as scm says above, 50% of each adtl dollar will go toward reducing your financial aid package. Work study is excluded from that calculation. And you may have to pay taxes, on top of that-- and on top of the taxes you'll pay on your grants/scholarships that exceed tuition and fees.</p>

5

<p>Thanks for the response. Haha, but I still have additional questions...</p>

<p>My likely school will use the profile, and they do expect a student contribution. If I do not work, will my financial aid package go up the following year, as the school could assume that my family can afford my share of the contribution?</p>

<p>Do colleges need confirmation that I have a job or do they simply want the money?</p>

<p>sblacke7, for scholarships, you do not pay taxes automatically, but only if it exceeds the tuition and fees? Can you clarify? And where did you get the $3200 figure from?</p>

<p>My tentative Dartmouth financial aid estimate expects a $2500 student contribution. If I make more than $2500 over the summer, which is likely if I am accepted for the paid internship, which requires 40 hours a week for a span of 2 1/2 months, what will happen to my financial aid package? Will they increase my family EFC, or will they have no way in finding out?</p>

6

<p>
[quote]
My likely school will use the profile, and they do expect a student contribution. If I do not work, will my financial aid package go up the following year, as the school could assume that my family can afford my share of the contribution?

[/quote]
</p>

<p>If you do not work, Dartmouth will not increase your finanical aid package. You will have to replace that money the best way you can.</p>

<p>While your EFC will not go in this fall when you reapply for financial aid for sophomore year, you will have an increased student contribution because of your increased EFC. Even if you chose not to work at all for each of your subsequent years at Dartmouth they have a minimum student contribution that each student is accountable for (the net-net is yes, your student contribution will go up a little each year regardless of your financial situation). </p>

<p>Dartmouth parent here: My daughter was on campus for sophomore summer (with a work study job), did a study abroad this pass fall and is now home on a leave term and she still has an student contribution to fulfill.</p>

7

<p>So does this mean, that working over the summer will not have an impact on my financial aid package the following year, since the student contribution will increase automatically?</p>

<p>Or would our family contribution increase as well (I know very minimally) due to me working, since I am considered a dependent?</p>

8

<p>"My likely school will use the profile, and they do expect a student contribution. If I do not work, will my financial aid package go up the following year, as the school could assume that my family can afford my share of the contribution?"</p>

<p>Schools that use the Profile (Institutional Methodology) include a minimum student contribution to the EFC of $1550 ($2150 as an upperclassman). If the student keeps his/her income below $3357 ($4656 for an upperclassman) there won't be an increase in EFC (and a corresponding decrease in aid) from student income. For every dollar earned and saved above those thresholds, the student can lose up to 75 cents in aid eligibility.</p>

<p>Not working at all shouldn't affect your EFC or aid package.</p>

<p>"Do colleges need confirmation that I have a job or do they simply want the money?"</p>

<p>They've decided from a policy perspective that students should have some "skin in the game" and that it's best for students to contribute toward their education. So the formula is constructed to encourage students to work and contribute. But working isn't required. Work is usually documented via tax returns, but beyond that, they generally won't ask for any verification.</p>

<p>"sblacke7, for scholarships, you do not pay taxes automatically, but only if it exceeds the tuition and fees? Can you clarify?"</p>

<p>This is a tax code thing-- usually best to get advice from a tax pro. In general, scholarships and grants that go toward tuition, fees, and required books, are non-taxable. Grants and scholarships that go toward room/board/travel/miscellaneous expenses are taxable. You'll get a 1098-T from your school breaking down some of this. You only report on your income taxes the taxable income, not the non-taxable income.</p>

<p>Even though it's income, and some of it is taxable, it doesn't affect your FAFSA/Profile calculations of EFC (it gets deducted out in the formula). Nor does work study income. </p>

<p>"And where did you get the $3200 figure from?"</p>

<p>It's actually $3249 (FAFSA student work threshold). It's the result of the FAFSA formula, where the first $3,000 after tax dollars are excluded from income. That translates to $3249 pre-tax dollars of income.</p>

<p>"My tentative Dartmouth financial aid estimate expects a $2500 student contribution. If I make more than $2500 over the summer, which is likely if I am accepted for the paid internship, which requires 40 hours a week for a span of 2 1/2 months, what will happen to my financial aid package? Will they increase my family EFC, or will they have no way in finding out?"</p>

<p>Use the FinAid calculator to crunch various numbers and see what it does to your EFC. There's no income protection allowance under Profile-- so they'll assess 50% of your income from the first dollar. Best to keep the income below about twice what the expected student contribution is. But use the calculator, and remember that each of the Profile Schools can adapt the formula as they see fit.</p>

<p>"no way of finding out..."</p>

<p>Don't try to scam the financial aid folks-- they won't be amused.</p>

9

<p>Your student contribution is going up whether or not you work over the summer. </p>

<p>At minimum it will go up about $100, like Sblake has stated in numerous posts already, your student will in crease in relation to your income.</p>

<p>
[quote]
"no way of finding out..."

[/quote]
</p>

<p>you have submit copies of yoru W-2's whether or not you file taxes in order to verify the income from the summer job (unless you plan on defrauding the IRS also). </p>

<p>Playing loose with your FA will be grounds for you:</p>

<ol>
<li>losing your financial aid and facing stiff penalties fines and even criminal charges (your parents could be charged also)</li>
<li>Repaying all of the aid that the school has given to you
3.being dismissed from the school if are a current student</li>
<li>having your degree rescinded if you have graduated</li>
</ol>