Work-Study Cancellations

Lately I’ve heard from several families whose students have received revised financial aid awards that canceled or reduced their work-study. What does that mean? What should you do if this happens to you?

Let’s start with what work-study is: an on-campus (generally, though some are private sector) job that is partially subsidized by the Department of Education. Schools love work-study because they typically only pay 25% of the wage. Schools typically have an annual budget for work-study which is determined by an archaic formula (as is the case with most Department of Education formulas).

For the student, the biggest difference between a work-study job and a “regular” part-time job is that because work-study is technically financial aid, work-study earnings are subtracted from the student’s total income in calculating EFC on the FAFSA or CSS Profile. Dependent students have an Income Protection Allowance of $6,840 on the coming FAFSA. This equates to 570 hours of work at $12 per hour, so only students who live in high minimum wage states and work full-time all summer and part-time during the school year are likely to have their EFC impacted by getting a non-work-study job. Work-study awards also have a dollar cap; the average is around $1,800 according to Sallie Mae. Many students thus find their job ending despite their need to continue earning money.

This fall, many work-study positions simply won’t exist due to on-campus facilities being closed or functions having changed. Students may find work-study awards replaced by either loans or grants, depending on their school. If it’s the latter, congratulations! If it’s the former, the student might consider simply looking for a non-work study position during the school year. Unfortunately this year even part-time jobs in the private sector may be hard to come by and may make it challenging to comply with campus quarantine policies. The primary upside is, a student who needs to borrow more due to loss of a work-study position will at least benefit from this year’s low interest rates on direct student loans— 2.75%.