Does Work Study Count as Employment?
Work-study is a unique financial aid program that functions like a job. Understand how it's classified and what that means for your finances and career.
The Federal Work-Study program is a form of need-based financial aid that provides funding for part-time jobs, allowing students to earn money to help cover their expenses. Whether this arrangement counts as “employment” is a layered question, as the answer changes depending on if you are discussing income taxes, future financial aid applications, or professional experience. The classification of these earnings has distinct rules in each of these contexts.
Work-Study and Your Taxes
For federal and state income tax purposes, money earned through a work-study job is considered taxable income. Your employer will provide a Form W-2 detailing your total earnings and any taxes withheld. This income must be reported on your tax return.
A tax detail distinguishes work-study from other employment concerning payroll taxes. The Internal Revenue Service (IRS) exempts students who are employed by their school and enrolled at least half-time from FICA taxes. FICA taxes consist of Social Security and Medicare taxes.
This FICA exemption means these taxes are not deducted from your paychecks, resulting in a higher take-home pay compared to a non-work-study job with the same gross wage. The exemption is based on the idea that the work is secondary to the purpose of education.
Impact on Financial Aid Eligibility
When applying for financial aid for the next academic year, work-study earnings are treated differently. You are required to report all of your earned income on the Free Application for Federal Student Aid (FAFSA), including any money made through a work-study position. The income reported will be the gross amount listed on your W-2 form.
Although this income is reported, the federal formula used to determine your financial need handles it differently from other earnings. The calculation now determines a Student Aid Index (SAI), and in this new calculation, earnings from Federal Work-Study are excluded from the student’s total income.
This special treatment means that your work-study earnings do not increase your SAI. A lower SAI generally results in eligibility for more need-based financial aid. By excluding these specific earnings, the system ensures that participating in the work-study program does not negatively affect your ability to qualify for aid in subsequent years.
Work-Study as Professional Experience
From a career perspective, a work-study position is considered legitimate employment and a valuable addition to your resume. Future employers view this experience as they would any other part-time job. It demonstrates a work ethic, time management skills, and the ability to balance multiple responsibilities, such as academics and a job.
When adding the position to your resume, use a specific job title rather than a generic one like “Work-Study Student.” Focus on detailing the responsibilities you held and the accomplishments you achieved. Use action verbs to describe your duties and, where possible, quantify your successes. For example, instead of saying you “assisted with office tasks,” you could write “Reorganized filing system, improving office efficiency.”
Highlighting the transferable skills gained is also beneficial. Skills like communication, data entry, customer service, and problem-solving are applicable in many professional fields. Treat your work-study job with the same seriousness as any other professional role, as it provides a foundation of experience that can help you secure future employment.