| AwardYear: 1996-1997 EnterChapterNo: 7 EnterChapterTitle: Federal Work-Study Program SectionNumber: 2 SectionTitle: Calculating FWS Awards PageNumbers: 11-14 NEED ANALYSIS FORMULAS [[COA - EFC = Financial need]] As stated earlier, a student must have financial need to be eligible for a Federal Work-Study (FWS) job; that is, the students cost of attendance (COA) must be more than the amount of his or her Expected Family Contribution (EFC) as calculated by the Federal Need Analysis Methodology. Procedures for determining a students COA and eligibility for aid from Student Financial Assistance (SFA) Programs are discussed in Chapter 2, Section 2. A financial aid administrator may not award FWS employment to a student if that award, when combined with all other resources, would exceed the students need. Resources, as defined in the campus-based regulations, are listed in Chapter 5, Section 2. Additional information about resources and overawards, as they apply to the FWS Program, is included below. DETERMINING MAXIMUM FWS ELIGIBILITY [[Financial need - Other resources = Maximum FWS award]] In determining the maximum FWS award a student is eligible to receive, the aid administrator must take into account the following resources: - those resources the aid administrator can reasonably anticipate at the time aid is awarded to the student, - those the school makes available to its students, or - those the aid administrator knows about. The sum of a students FWS award plus other resources may not exceed his or her financial need. [[Treatment of non-need-based earnings]] NON-NEED-BASED earnings, such as earnings from a job a student locates on his or her own with a private employer, are not considered to be a resource for the current award year because they will be reported on the Free Application for Federal Student Aid (FAFSA) for the subsequent award year and will be used to determine the EFC for the subsequent award year. Only net income from NEED- BASED employment is considered as a resource. Examples of need- based employment would be employment under the U.S. Department of Veterans Affairs work-study program and employment with a state if that employment is based on the students need for assistance to pay for educational expenses. The school monitors each students net income from need-based sources to determine whether the students need has been met. The school does so by examining the schools payroll records of disbursements to the student under the FWS Program and any other need-based employment program. The schools FWS fiscal records must be reconciled at least monthly. EARNINGS APPLIED TO COA [[Treatment of taxes and job-related costs]] Not all of a students FWS earnings are available to the student for educational expenses. Some of the students expenses may be job related. Therefore, to determine the net amount of a students FWS earnings that will be available to help pay for his or her COA, the school must subtract estimated taxes and job-related costs from the students gross FWS earnings. Examples of job-related costs include uniforms, the cost of meals at work, and transportation to and from work. During vacation periods, room and board may also be considered job-related costs if the student is paying them ONLY because he or she has an FWS job. For example, to earn a net FWS award of $1,000, a student with a Social Security tax of 7.65% and $100 in job-related expenses may earn up to $1,176.50 in gross earnings ($1,000 + $76.50 + $100). Only the net earnings of $1,000 are available to count toward the students need for federal student aid and to help pay for the students COA. Federal and state income taxes paid may also be withheld from a students wages. In some cases, these should also be deducted from the students gross income to calculate the net amount available to the student; however, if the aid administrator is certain that the students federal taxes paid will be refunded by the Internal Revenue Service (IRS), the school should not subtract these amounts from the gross wages when calculating the net wages available to the student for the FWS award. Similarly, if the aid administrator is certain that the students state taxes withheld will be refunded by the state, the school should not subtract these amounts from the gross wages when calculating the net wages available to the student for the FWS award. Only taxes the student will actually pay (those that will be withheld and NOT refunded) should be subtracted. [[Working during a period of nonattendance]] If the student works during a vacation or other period when he or she is not attending classes, his or her net FWS earnings (earnings minus taxes and job-related expenses) from that period must be counted toward payment of the students COA for the NEXT enrollment period. A school is encouraged to tell each FWS recipient how much of his or her earnings it estimates to be counted toward payment of his or her COA. Of course, at the end of a students employment, the school will need to review the estimate to see if it was accurate and to make adjustments if it was not. FWS OVERAWARDS A detailed discussion of the treatment of overawards in SFA Programs is included in Chapter 2, Section 2 of this handbook. Overawards in the FWS Program are treated a little differently than overawards in other SFA Programs. A school may award FWS employment to a student only if the award, when combined with all other resources, does not exceed the students need. If, AT ANY TIME DURING THE AWARD PERIOD, the student receives additional resources that were not considered in calculating the students FWS award and these resources--including the expected FWS wages--will exceed the students need, the overaward is the amount that exceeds need. FWS employment must be discontinued when an FWS-employed student receives resources that exceed his or her need by more than $300. Resources include wages earned from any other NEED- BASED employment. Wages earned from non-need-based employment are not considered resources and, thus, cannot cause an overaward. FWS earnings of up to $300 in excess of need are not considered to be an overpayment in the current award year if the FWS aid was awarded before the financial aid administrator was aware of the students additional resources. In such a case, these excess earnings should not be counted in the following award year either as a resource or as income to be included in calculating the EFC. Income from a non-need-based job will be counted as taxable income and included in calculating the students EFC for the following award year. TREATMENT OF RESOURCES IN EXCESS OF NEED If a school learns that a student earning FWS wages has received additional resources that were not included in calculating the students FWS eligibility and the resources would cause the financial aid package to exceed the students financial need by more than $300, the school must take certain steps: [[Overaward with FFEL or Direct Loan in the aid package]] 1. If the students aid package includes a Stafford Loan under the Federal Family Education Loan Program (FFEL) or Direct Loan Program, the school must first follow the overaward requirements that are presented in Chapter 10 or Chapter 11, respectively. Also, a school may attempt to reduce or eliminate the overaward by changing the function of an unsubsidized loan (a Stafford Loan, a nonfederal loan, or the parents PLUS Loan) from covering need to replacing the EFC. [[Recalculate need]] 2. If there is no FFEL or Direct Loan in the students aid package or if the school eliminates the FFEL or Direct Loan overaward and if in either case the students total resources still exceed the students need by more than $300, the school must recalculate the students need to determine whether he or she has increased need that was not anticipated when the school awarded aid to the student. If the students need has increased and if the total resources do not exceed the increased need by more than $300, the school is not required to take any additional action. [[Canceling loan or grant]] 3. If the school recalculates the students need and determines that the students need has NOT increased or that his or her need has increased but that the total resources still exceed his or her need by more than $300, the school must cancel any loan or grant (other than a Federal Pell Grant) that has not already been disbursed. 4. If the school recalculates the students need and determines that the students need has increased and if the total resources do not exceed that increased need by more than $300, the school may use FWS funds to pay the student until the FWS award has been earned or until the students increased need has been met. In addition, the school may continue employing the student under FWS after the full amount of the FWS award has been earned and the students financial need has been met; however, the school may pay the student with FWS funds only up to the time the income from NEED-BASED employment exceeds the students financial need by more than $300. At that point, FWS funds may no longer be used to pay the student. The school may continue to employ the student, but funds other than FWS funds must be used to pay the wages. |