Income protection allowance!!

I hear from many parents regarding their concern over the earned income of their children and how they are fearful about the impact that income may have on the anticipated financial aid eligibility for their children.

As has been previously mentioned, there are many non-monetary benefits for students having a job. Repsonsibility, time management and the building of professional skills are just some of these benefits. To discourage a young person from working, simply because it could impact a student's aid package would be a disservice to that student. It is apparent that the federal government feels the same way. As a part of the CCRAA legislation of 2007,increasing income protection allowances were built into the federal need analysis formula that considers income into the Expected Family Contribution only if the level of income exceeds what is protected. For example for the 2011-2012 academic year, using 2010 income, a student can earn up to $5250 during this year before any amount will be used towards the EFC. Only a percentage of the income above $5250 will count toward the EFC.

So if your dependent child wants to work, allow them to do so. I would recommend paying close attention to the year-to-date earnings just as a strategic planning mechanism. More than likely, most students working part time, (unless they are being paid a high hourly wage or are working a great deal of hours) will not exceed the protection allowance by much. But understanding the formulas and the impact of the various components upon it, helps build clearer understanding of the entrie financial aid picture!!!