Does Student Income Affect Financial Aid? Probably: So Be Prepared

student income and loans

In 2011, 71% of all undergraduate students in the country worked a part time job. Of that 71%, one in five worked 35 hours per week, according to a report put out by the U.S. Census Bureau. These students likely thought that they were doing something responsible, as working could allow them to save up money they could use to pay back their student loans just a little bit faster. However, working like this could have a big impact on the financial aid a student qualifies for, and in some cases, having a job on the side might force a student to work even harder to pay the bills. This can result in a funding gap, and can make covering the next tuition bill challenging.

Understanding Eligibility

In order to understand how part-time work can actually penalize a student on his or her financial aid award, it’s helpful to understand the basics of how federal financial aid is measured and disbursed. At a basic level, when students apply for financial aid, they provide information about their income and their parents’ income, if applicable, in addition to assets held and that sort of thing. The Department of Education and the student’s school then uses these numbers to assess the amount of financial need that student has. In this case, if a student has a job on the side, their income is higher, and as such they are determined to have less financial need than if they were not working a paying job.

Of course, some students who are working paying jobs aren’t necessarily doing so to pay for their college tuition. Some may be working to cover living expenses while in school, or others may be trying to build up a nest egg; but the FAFSA does not take these factors into consideration, and sees any student income as simply another source of college funding. In the eyes of the Department of Education and the schools, those students who work simply need less help. Their jobs help them to pay the bills, so they’ll qualify for a smaller amount of assistance. This makes for a sticky situation, though: if the student were to lose their part-time job, or even quit, their financial aid package would no longer be aligned with the student’s needs.

Being Smart

There’s no reason for students to quit working altogether. In fact, research quoted by the American Association of University Professors suggests that students who work about 10 to 15 hours each week tend to be more successful than students who don’t work at all, and they’re also more successful than students who take on more than 15 hours of work per week. Students like this might be building up valuable on-the-job skills, and they can take a break from their studies for a time and really focus on their careers. Odds are these students are also self-starters: if they’re motivated to work on the side, they’re probably putting in the extra effort to make their academic work as strong as it can be. Working can also help to reduce the amount of money a student needs in loans, and that money might also help to cover school incidentals, like:

  • Textbooks
  • New electronics
  • Personal spending

student studying outsideStudents should take care to limit the amount they work. If a student has an opportunity to make a significant amount of money working while in school, he or she should sit down with a financial aid advisor to understand the potential impact of these extra earnings on a future financial aid award. Sometimes, and it’s very counter intuitive, taking a job on the side can be a harmful financial decision for students.

If you find yourself in a situation where you have impacted your financial aid eligibility as a result of working a job on the side while in school, you have a few options. You can do your best to put all of your earnings towards tuition and/or repaying loans, but that’s not always feasible. Your next best options are to pursue scholarships and grants, and failing that, to look into private student loans.


Tuition and Bills