Can You Use Work Study Money for Anything?

Federal Work-Study (FWS) is a federal financial aid program designed to help eligible students earn money to cover their educational expenses. Administered through participating colleges and universities, FWS allows students to earn wages for hours worked, distinguishing it from grants or loans which are disbursed directly. It offers a practical way for students to fund their education while gaining valuable work experience.

Receiving Work Study Funds

Students in the Federal Work-Study program receive funds as earned wages, much like income from any other job. The money is typically paid directly to the student through a paycheck or direct deposit. Unlike some other forms of financial aid, work-study funds are generally not applied directly to tuition or other university bills by the school unless the student specifically authorizes this. Students usually receive payments on a regular schedule, such as weekly, bi-weekly, or monthly, depending on the employer and institutional policies. The financial aid office determines an “award amount,” which represents the maximum a student can earn through the program, not a lump sum payment received upfront.

General Uses of Work Study Money

Once earned, Federal Work-Study money becomes part of a student’s personal income. Students generally have broad discretion over how they use these funds. The money can be applied to virtually any personal expense, similar to income derived from a non-work-study job. Many students use their earnings to help cover educational costs not directly billed by the university, such as books, supplies, and laboratory fees. Funds can also be used for everyday living expenses, including rent, utilities, groceries, and transportation, as well as other general expenses like personal care items, clothing, or discretionary spending.

Specific Spending Limitations

Limitations on Federal Work-Study money primarily pertain to how funds are earned, not strict federal restrictions on how wages are spent once received. Work-study funds are earned wages tied directly to hours worked, meaning a student cannot access the full award amount as a lump sum for a large purchase before working. The principal limitation is the awarded maximum earning amount, which dictates the total wages a student can earn through the program for a given period. If a student does not work the hours necessary to earn the full award, they will not receive that portion of the potential funds. Schools also set policies regarding job eligibility and the number of hours a student can work, which indirectly impacts the total funds available.

Financial and Tax Considerations

Federal Work-Study wages are generally considered taxable income for both federal and state income tax purposes. Students will receive a W-2 form from their employer, typically the school, detailing their annual earnings. Federal and state income taxes may be withheld from paychecks, just like with other employment. However, work-study earnings are typically exempt from Federal Insurance Contributions Act (FICA) taxes, which include Social Security and Medicare taxes, provided the student is enrolled full-time and working part-time. When applying for future financial aid through the Free Application for Federal Student Aid (FAFSA), work-study earnings are usually excluded from income calculations, which helps ensure that earning money through Federal Work-Study does not negatively impact a student’s eligibility for need-based financial aid in subsequent academic years.