Does Work Study Have to Be Paid Back?
Understand Federal Work-Study: a financial aid program that provides students with earned income, not a loan to be repaid.
Federal Work-Study is a program designed to help students finance their education through part-time employment. It allows eligible undergraduate and graduate students with demonstrated financial need to earn money to help cover their educational expenses. This federal initiative also helps students gain valuable work experience.
Understanding Federal Work-Study
Federal Work-Study is a financial aid program that provides funds for part-time jobs for students who need to earn money for college. This program is distinct from other financial aid because it provides earned income for work performed, rather than a direct award or loan. Students are employed in positions, often on campus or with approved off-campus community service organizations, and receive a paycheck for the hours they work. Because these earnings are compensation for actual work, the money students earn through this program does not have to be paid back.
How Work-Study Funds Function
Students participating in Federal Work-Study are paid an hourly wage for the hours they work, much like any other employee. The pay rate for work-study positions must be at least the federal minimum wage, though it can be higher depending on job responsibilities. These earnings are typically paid directly to the student via a regular paycheck, which can be used for various educational or living expenses.
While the funds do not need to be repaid, the wages earned are generally subject to federal and state income taxes. Institutions provide a Form W-2 to students each tax year for filing purposes. Work-study earnings are typically exempt from Federal Insurance Contributions Act (FICA) taxes, including Social Security and Medicare, provided the student is enrolled at least half-time and the work is performed for the educational institution.
Work-Study and Your Financial Aid
Federal Work-Study fits into a student’s overall financial aid package as a form of “self-help” aid. This aid requires the student to actively work to receive funds, differentiating it from grants and scholarships, which are gift aid. Unlike federal student loans, which must be repaid with interest, work-study funds do not accrue interest and do not require repayment.
Eligibility for Federal Work-Study is determined by demonstrated financial need, assessed through the Free Application for Federal Student Aid (FAFSA). The amount of work-study offered is limited by the student’s financial need and the funds available at their institution. A significant benefit of Federal Work-Study earnings is that they generally do not reduce a student’s eligibility for other forms of federal student aid in subsequent academic years.