Does Work Study Money Go to You or the School?
Find out how Federal Work-Study funds are paid directly to you, how to use them, and their impact on your finances.
Federal Work-Study (FWS) is a federal student aid program designed to help eligible students earn money to pay for their educational expenses. This program provides part-time employment opportunities for both undergraduate and graduate students who demonstrate financial need. Unlike a student loan, the funds earned through Federal Work-Study do not need to be repaid, making it a valuable resource for managing college costs. The program also encourages students to engage in community service or work related to their course of study, offering practical experience alongside financial support.
Work-Study Fund Disbursement
Federal Work-Study funds are earned wages, rather than a lump sum payment provided directly by the school. Students must actively work and complete assigned hours to receive their allocated work-study award. This means the money is typically paid to the student through a regular paycheck.
Most institutions offer direct deposit as the primary method for receiving work-study earnings, with physical paychecks as an alternative. Payments are issued on a consistent schedule, commonly bi-weekly or monthly. While some schools may allow students to apply earnings directly to their student account, students typically receive the funds directly.
Students are paid for the actual hours they work, up to their awarded limit, and must adhere to their employer’s timekeeping procedures. The amount earned depends on the hourly rate and the number of hours worked, with rates generally meeting or exceeding the federal minimum wage.
Permissible Uses of Work-Study Earnings
Once Federal Work-Study earnings are received by the student as a paycheck, these funds offer considerable flexibility in how they can be used. Work-study earnings are generally intended to cover a wide array of educational and personal expenses, unlike some other forms of financial aid with strict spending limitations.
Common uses for work-study earnings include paying for books and supplies, covering daily living expenses such as food and transportation, and contributing to housing costs. Students can also choose to apply their earnings towards tuition and fees, although the timing of paychecks often means these funds supplement, rather than directly cover, initial bill payments. The flexibility of these earned funds helps students manage their overall cost of attendance and reduce reliance on loans.
Tax Implications and Future Financial Aid
Earnings from Federal Work-Study are generally considered taxable income by both federal and state governments. Students receiving work-study payments will typically be issued a Form W-2 for tax reporting at the end of the calendar year. These earnings must be reported on a student’s income tax return.
While work-study earnings are subject to federal and state income taxes, students may be exempt from Federal Insurance Contributions Act (FICA) taxes, which include Social Security and Medicare taxes, if they are enrolled at least half-time and working part-time. When completing the Free Application for Federal Student Aid (FAFSA) for subsequent academic years, work-study earnings are uniquely treated.
Federal Work-Study income is typically excluded from calculations of a student’s Expected Family Contribution (EFC), which has been replaced by the Student Aid Index (SAI) under the FAFSA Simplification Act. This means that the money earned through Federal Work-Study generally does not negatively impact a student’s eligibility for other federal financial aid in future years. Students report their work-study earnings on the FAFSA, but are subtracted before determining aid eligibility.