When It Comes to Financial Aid, a College Job Can Backfire

August 22, 2018 Updated: August 22, 2018

CHICAGO—Elissa Schimmel does not want to finish college buried in debt, and she worries her parents already are spending too much to help her older brother pay for college.

As Schimmel begins Harper College in Palatine, Illinois, this week, she has scheduled classes for mornings so afternoons are free for a second job. She already has a weekend gig at a pharmacy.

“My parents worked so hard to give us a good life,” said Schimmel, 17 of Barrington, Illinois. She said she wants to spare them additional financial stress.

Many students share the burden of paying for college. About 78 percent of college students work at least part of the year, and 45 percent—including Schimmel—work year-round, not just during summer breaks, according to a new survey by student lender Sallie Mae.

About 58 percent of freshmen add hours of work as they juggle tuition, housing and other bills—sometimes topping $25,000 a year at public universities and $70,000 at private colleges.

Yet, despite the good intentions, working more hours as a student may backfire if a family cannot afford college and has qualified for financial aid.

Aid formulas targeting families with financial needs typically reduce scholarships and grants for upcoming school years if a student’s income rises roughly above $7,000 a year, said Kalman Chany, a financial aid consultant and author of “Paying for College Without Going Broke.”

Consider, for example, a college freshman who has already earned about $7,000 this year and tries to cram in an additional $3,000 before the end of 2018. That student’s aid could be slashed by as much as $1,300 in the next school year, Chany said.

“Parents think they are planning well if they get their child to work more, but they don’t know what they are doing,” Chany said.

That is because few people understand the quirky financial aid formulas embedded in the Application for Federal Student Aid (FAFSA) or the College Scholarship Service (PROFILE) applications families submit when they seek help paying for college.

Chany and other experts provide this advice to families who need aid:

Watch Limits

Students can earn some income without having it cut into aid. Just be wary once it approaches $7,000 a year.

Limits are not precise. They vary based on other sources of income, state taxes, whether a student is attending a public or private college and the type of aid.

Although financial aid typically kicks in when students begin college, that first year is not when working income matters. The application for first-year financial aid looks at income students earned in jobs two calendar years earlier. Families need to start paying attention to what students earn from jobs as early as the second half of 10th grade, starting Jan. 1.

For each year of college, families reapply for financial aid. After students pass Jan. 1 of their college sophomore year, they no longer have to worry about income from jobs. They can work as much as they want for the rest of college.

Certain programs also have special limits. For example, New York residents may attend state public colleges (CUNY and SUNY) tuition-free if parent and students’ incomes do not total over $125,000 for the coming school year. A student’s job could put them over the limit.

Take the Work Study Job

If a student is offered a work-study job as part of a financial aid package, that is usually the job to take rather than an outside job. The reason: Work study job income does not impact aid, while other jobs will.

Keep in mind that working while in school has other ramifications. When students work more than 15 hours a week, grades can suffer and exhaustion leads many to drop out, according to research by Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.

When working students do graduate, low grades may keep them out of jobs or graduate school. Carnevale has found that students who spend too much time working while attending classes also skip internships that provide a leg-up for quality jobs upon graduation.

Borrow Now, Work Later

If students cannot afford college without working a lot during their freshmen or sophomore years, they may be wise to resist extra jobs and take out more loans for the first two years of school. Then, once they are late in their sophomore year, or any time as a junior or senior, they can work as much as they want while avoiding extra loans.

By Gail MarksJarvis