Question About Work-Study (Financial Aid)

[Vash]

Going to college this fall and did all the FAFSA stuff. I got work study but have a few quick questions about it. How does it work?

1. I get all the money and the money I earn from the job I get will pay it off.
   
2. I get all the money and just have to work but the money I earn from the job is separate from the the work study money I get to use it.
   
3. Money I earn from the work study job is the money I use for tuition.

Also the Financial Aid money you get (any leftovers...grants and scholarships); do you have to report the amount you get for your tax returns? Work study is a duh.

I know this isn't the best place to ask but was hoping if someone here had to do this before so I could get a quick answer.

 

[arcthemonkey]

Nnnk, well, lemme see if I understand you -

You are asking if your work study money goes to pay back the money they give you in financial aid? No.

When your financial aid is calculated, the produce a cost of attendance. From your cost of attendance, they subtract your expected family contribution, and any scholarships/etc you recieve. This produces what is usually referred to as your financial need.

Work study is either granted or denied, and usually something like $2000 max a term, which works out to about 20 hours a week. You are then given however much grants you qualify for. Sometimes, you get lucky and get the full value of the grants, which is actually enough to pay for some cheaper schools, however, because most of the grants are based on your income and financial need and so on, you may not get the full value of the grants. If your work study and grants don't cover your financial aid, you are able to borrow Perkins/Stafford loans. If THOSE don't cover it (welcome to my hell), your parents are eligable to apply for a Parent PLUS loan. If they are accepted, then congrats, your parents will hate you for forcing them to borrow non-deferred money to cover your college. If they are denied, you can actually write a letter asking them to increase your borrowing limit, which, if they let you, are the crappy loans where the government doesn't pay the interest, which means they just keep getting bigger and bigger.

Grants and Loans aren't taxable income (at least, I've never had to claim them), and I'm actually unsure on how work study works (I only got it one year).

Anyway, the thing about work study is that it's just a normal job that financial aid counts against your aid ^_^. You may or may not have to pay taxes on it. Again, I'm not sure.

 

[Vash]

I got enough grants and scholarships to cover about what I need. I qualify for a $2500 work study. Since I don't really need it; can I still apply for it and work for money I might need in the future?

Also I asked on other forums and they say work study jobs are like any other jobs but the government pays you. I just want to know if work study must put on tax forms when the time comes. Also about grants and scholarships as well (I hope they are not).

Thanks a lot arcthemonkey; your the only one to give me a lot of information.

Anyone else?

 

[arcthemonkey]

Once again, grants and scholarships are not taxable, as long as they are being used to pay for school. There is supposedly a tax that can arise if you are recieving such funds to pay for room and board, or if your award far exceeds you tuition and fees, but 90% of people don't get that much money, and pay for room and board with loans. In other words, only your excess funds are taxable income, and excess funds are determine by something else entirely. If you get a $600 refund check at the beginning of the term after tuition and all is paid, you probably don't have to pay taxes on that, since it's technically meant for supplies and transportation.

Really, the only way you would have to pay taxes is if you got a weird scholarship that, instead of giving you money every term or semester, just cut you a check for $10,000.

As for work study, I picked this up off of a random website - dunno how reliable it is.
From http://www.newaccountantusa.com/newsFeat/is/is_fundsandtaxes.html

The "work-study" program that many students participate in is another source of funds. The program is normally administered through the university's financial aid office. A student in this program is required to work part-time for the institution. All income received is taxable for federal income tax purposes, because the student is performing services that are in the nature of part-time employment.3 An exception applies when the work is required as part of the degree program. The "work-study" income may be exempt from social security tax, if the student is "working for a private school, college, or university, is enrolled, and is regularly attending classes."4 The "work-study" designation can be extended to work performed on campus for entities like bookstores, etc.

I would say you should probably report work study earnings.