Will a Summer Job Hurt Your Financial Aid for College?
It’s smart to earn money before college begins, but you may be wondering, "How much can a student earn before affecting financial aid?" Read on to learn more.
It’s a smart idea to try to earn some money before college officially starts. Getting a summer job allows you to focus on earning money without worrying about how you’ll juggle your school work. However, the money you earn may affect the financial aid you’ll receive. Before you take a summer job, think about the kind of work you want to take on and how many hours you’ll work so that you understand the potential impact on your aid.
Here’s how much a student can earn before it affects financial aid.
How Income Affects Your Financial Aid
When it comes to getting financial aid, students need to complete the FAFSA, or the Free Application for Federal Student Aid. The information from that application is used by colleges to determine how much you and your family are able to pay for school. That’s known as the EFC, or expected family contribution.
What that means is the EFC will look at both your income and assets and your family’s income and assets when it comes to determining how much aid you’ll get. The aid you may qualify for could include Pell Grants, which are a form of need-based aid you aren’t required to pay back, and subsidized federal student loans, on which the government pays interest while you’re enrolled in school. In addition, colleges may award institutional aid such as scholarships and grants based on your financial need.
Typically, the more assets and income a student and family have, the less the student will receive in aid. Yes, that means the earnings from your part-time or summer job will count towards your EFC and may affect your financial aid. When you include that income on your FAFSA, your EFC may go up, which could make it seem like you’re not in need of financial aid as much as some other students are.
Even if you’re not planning to put the money you’re making from your summer job toward college expenses, the federal government will view the income as a way you can pay for school.
Is There Any Income That’s Exempt?
There is some good news, especially if you think it seems like the FAFSA penalizes working students: Your annual income is excluded from the EFC up to a certain point.
If you’re a dependent student, the FAFSA won’t count your income if you earned $7,040 or less. For those who earned more than that amount, half of your excess earnings will count.
Let’s say you worked at the local bookshop and earned $2,000 in the past few months — your income will be excluded from the EFC. In most cases, summer jobs typically won’t net you earnings above this amount, assuming you’re earning $10 per hour or less. You’ll probably need to work part time throughout the year to hit that income threshold.
If, however, you end up earning $9,000, then the FAFSA will still exclude the $7,040 and look at the remaining $1,960 — and count only $980 of it. It’s hard to predict how much the extra $980 will affect the financial aid you’ll ultimately get.
The Education Department’s FAFSA4caster is a useful and free tool that can give you a glimpse of how much you may be able to get in federal aid based on your and your family’s assets and income. It’ll help to determine your EFC and give you an estimate of your projected financial aid, including federal loans, Pell Grants and federal work-study programs.
Which Earnings Can Affect Your FAFSA
It’s understandable if you want to figure out whether your earnings will affect your financial aid. The FAFSA uses information about your income from two years prior. That means if you’re determining your financial aid eligibility for the 2021-2022 school year, you’ll need to include your income and tax information from 2019 on your FAFSA.
That could be good news if you didn’t earn much in the summer of 2019, but if you’re a college student who is ready to graduate and had a high-paying internship or job back then, your financial aid may be less.
Keep in mind that any income you earn from a work-study job won’t count toward your EFC.
Working a summer job and even through the school year has plenty of benefits other than income — think work experience and networking that can help you land a job after graduation. Still, it’s worth thinking through your potential earnings, especially if you believe you’ll be better off qualifying for more financial aid.
Limits for Independent Students
Independent students don’t have to provide their parent’s financial information on the FAFSA. The U.S. Department of Education has guidelines for whether you qualify as an independent student.
An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, a person with legal dependents other than a spouse, an emancipated minor, or a person who is homeless or at risk of becoming homeless.
If you qualify as an independent student, then your income threshold goes up to $10,950 for a single student or a married student whose spouse is enrolled at least half time and $17,550 for a married student whose spouse isn’t enrolled at least half time.
Unfortunately, if you’re someone who has been working for a while or has a family, you’ll most likely exceed this exemption amount. Don’t worry about trying to remain within or as close to the income limits, though. There are plenty of colleges that will look at your individual situation and base financial aid decisions on factors other than the EFC.
It’s natural to worry about how the information you put on your FAFSA will affect your financial aid, especially if you expect to earn a lot during the summer months. If you’re unsure, you can reach out to a financial aid officer to try to gain more insight. You also may be able to get an exception to your EFC that’s designated on your Student Aid Report to come up with a solution that’s more suitable for your situation.
Don’t let worrying about financial aid prevent you from getting a summer job. You may be able to find ways to get additional aid if you don’t qualify for enough from the federal government.
Private student loans are another viable way to pay for college, and shopping around will help you get competitive rates. Juno negotiates low rates on private loans for undergraduate students and graduate students for free with partner lenders.
Sarah Li Cain
Sarah Li Cain is a finance writer and a candidate for the Accredited Financial Counselor designation whose work has appeared in places like Bankrate, Business Insider, Financial Planning Association, Investopedia, Kiplinger, and Redbook. She’s the host of Beyond The Dollar, where she and her guests have deep and honest conversations about money affects their well-being.
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