Last Updated Apr 19, 2011 2:39 PM EDT
Can a summer job hurt a teenager's chances for college financial aid?
Many families do worry that summer jobs for students can jeopardize their financial aid chances. But here's the good news: for the vast majority of students this is going to be a nonissue.
To understand why, you need to appreciate how the two most common financial aid applications - FAFSA and CSS/Financial Aid PROFILE - treat student jobs. Here is a look at both:
Free Application for Federal Student Aid (FAFSA)Students would have to earn a significant amount of money before the FAFSA, which is the nation's most common financial aid form, would penalize them for their jobs.
The federal formula permits a student to earn up to about $5,900 before it would affect his or her financial aid eligibility. Students receive an income protection allowance of $5,250 and then the federal formula raises the protected amount to roughly $5,900 to cover the income taxes and the Social Security withholdings that students would normally pay on those earnings.
So what if a student earns more than $5,900? The extra money would be accessed at 50%. Here's an example: A student earns $7,000 during the year, which is $1,100 over the protected dollar figure. You'd multiply $1,100 by 50% to get $550.
The federal aid formula would take the $550 and increase the family's Expected Family Contribution by that amount. The EFC is the amount of money, at a minimum, that any college would expect a family to pay for one year of college.
CSS/Financial Aid PROFILEMost students won't have to worry about the PROFILE's student earnings formula because only about 270 mostly private college and universities use this application.
The PROFILE automatically assumes that a freshman will contribute $1,750 to his first year of school, while upper classmen are expected to kick in $2,000 a year. These amounts are added to the family's EFC even if the student doesn't work.
The private schools that use the PROFILE are free to adjust these automatic contributions if they please.
First-year students could make up to $3,850 without increasing their EFC beyond the default rate while other college students could earn up to $4,400. Any excess income above those amounts would be accessed at 50%.
Bottom Line: Financial aid formulas rarely hurt students who work to help pay for college. So start looking for those summer jobs.
Lynn O'Shaughnessy is author of The College Solution, an Amazon bestseller, and she also writes her own college blog at The College Solution.
Summer job image by naught_facility. CC 2.0.
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