Part I: Reminders for Reporting Work-Study Earnings

By Rick Cox

Starting this summer, each student’s Federal Work-Study earnings must be reported to COD. This information is necessary to calculate the student’s SAI for the 2024-2025 award year. In preparation for this change, we wanted to provide reminders of FWS requirements. These are reminders and are not new guidance.

FEDERAL WORK STUDY, Part I

This blog will address the allocation of funds, as well as requirements related to employing and paying FWS students. Part II will feature information on eligible jobs and the federal and nonfederal share of earnings.

PLEASE NOTE: As part of COVID waivers, the flexibility to transfer up to 100 percent of FWS to FSEOG and Emergency FSEOG Grants remains through the payment period that includes April 10, 2023, which is the last day the national emergency was in effect. Additionally, the Community Service and Reading Tutor Requirements expire at the end of the award year that begins after April 10, 2023. This means it will be in effect until the end of the 2023-2024 award year.

Allocation

A school approved for FWS will receive an initial allocation. That school might also receive a supplemental allocation. The supplemental allocation must be used for community service FWS positions.

Underuse Penalty and Waiver

If a school returns more than 10 percent of its allocated FWS funds, the Department of Education will reduce the FWS allocation for the second succeeding award year by the dollar amount returned. Please note that a college can request a waiver of this requirement because of circumstances beyond the institution’s control.

A college must use at least 7 percent of its allocation for community service jobs with at least one student employed as a reading tutor or performing family literacy activities in a family literacy project. If an institution has requested and received supplemental FWS funds, they must spend 100 percent of the supplemental amount on community service positions. If an institution fails to meet the community service requirements, FWS federal funds must be returned in an amount that represents the difference between the amount a college should have spent for community service and the amount it actually spent. The college can request and may receive a waiver from the department of the community service requirements.

Transfer of Campus-Based Funds

A school may transfer up to 25 percent of its FSEOG allocation to its FWS allocation. However, you may not transfer FSEOG funds to FWS unless you have awarded and disbursed FSEOG funds to students in that same award year.

An institution can also transfer up to 25 percent of its FWS allocation (initial and supplemental) to FSEOG. However, to transfer FWS funds to FSEOG, the institution must have made awards and disbursements to students for both programs for that award year.

Carry Forward and Carryback

A college may spend up to 10 percent of its allocation (initial and supplemental) for either FSEOG or FWS in the following award year to pay FWS funds. A school is also permitted to spend up to 10 percent of its allocation (initial and supplemental) for either FSEOG or FWS to pay FWS funds in the previous award year.

Separately, an institution can carry back FWS funds for summer employment that is part of the prior award year. This applies to FWS wages earned on or after May 1 of the previous award year but prior to the beginning of the current award year (July 1). This carryback is in addition to the allowable 10 percent carryback of the current year’s FWS allocation to be used to pay FWS expenses in the prior award year.

The amounts carried forward or backward are not considered when determining the amount that may be transferred to FSEOG. Additionally, these funds are not considered when determining the maximum amount of FWS funds that may be used for FWS positions with private for-profit sector jobs. (An institution cannot use more than 25 percent of their allocation for students with private for-profit jobs.)

Student Earnings

A student may earn academic credit as well as compensation for FWS jobs. However, the FWS student cannot be paid less than he or she would be if they were not receiving academic credit; cannot be paid for receiving instruction in a classroom, laboratory or other academic setting; and cannot be paid FWS unless the employer would normally pay a person for the same job.

Students are not permitted to work during scheduled class times. If a class has been cancelled for that day, and the student is permitted to work during the normal class time, the school must document the exception.

FWS is designed for part-time employment and students should not be working overtime. However, there is not a prohibition on paying overtime. You cannot use FWS to provide fringe benefits, such as vacation time, sick leave, etc.

Undergraduates are paid on an hourly basis only. Graduate students may be paid by the hour or may be paid a salary.

FWS students must be paid at least the federal minimum wage. If a state or local law requires a higher minimum wage, the college must pay the student the higher wage.

The wage rate cannot be established based on a student’s need. It can only be established based on the student’s skills or job description. If a student’s skill level depends on the student’s academic advancement, the school may pay the student on that basis (for example, a junior or third-year lab student may be paid a higher rate than a second-year lab student). However, students performing jobs comparable to other employees should be paid comparable wages even if they are at different class levels or the others are regular employees.

Colleges must maintain timesheets that show the hours worked for each day and the total hours worked during that pay cycle. The timesheets must be certified by the student’s supervisor. An institution using an electronic process for recording hours must still have the hours certified by the supervisor. Additionally, the certification must satisfy the E-Sign Act standards.

FWS students must be paid at least once per month. Additionally, for payroll purposes, FWS students should be either entered in a separate sub-ledger or should be grouped separately from other employees. If the payroll records are maintained electronically, a special identifier must be used to differentiate FWS students from other employees.

FWS earnings cannot be subjected to garnishment and can never escheat to the state.

A student can be paid a reasonable amount of time for training for any FWS employment and can be paid for travel directly related to a community service job. A reasonable training period would not normally exceed 20 hours. If paying for travel time for a community service job, these are recorded in the same manner as hours actually worked. However, schools should provide students with a form that can be used for the student to notate travel time and differentiate it from regular hours worked.

Rick Cox is Global’s Executive Director of Regulatory Affairs and Compliance