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Federal & State Work-Study Programs

Written by Dr. Brittany Whitley
Published on September 20, 2021
Research Highlights

Work-study programs allow students with financial need to receive federal or state financial aid for participating in approved work experiences.

  • Work-study students are more likely to remain in school through graduation. The impact of work-study on college retention is typically attributed to the increased connection that on-campus employment provides students with their institution.
  • Because employment can compete for students’ scholastic time, work-study programs have been associated with slight reductions in academic achievement for some students.
  • Twelve states (e.g., IN, KS, TX) currently offer state-funded work-study programs for college students within the state.
  • State work-study programs are typically created to incentivize schools to partner with external employers in order to provide students with jobs that more closely match their career interests.

Executive Summary

Work-study programs allow students with financial need to receive federal or state financial aid for participating in approved work experiences. Most work-study students are employed in on- campus jobs that are not directly related to their specific course of study. Recent changes in the federal work-study (FWS) program and some statewide work-study programs have begun exploring ways to more closely link work-study jobs to student careers and local employment needs. Missouri currently does not offer a state-funded work-study program, although legislation was proposed in 2020 (HB 1430).

Limitations

  • There is limited research as to the effectiveness of statewide work-study programs compared to FWS and other forms of financial aid.

Research Background

Federal work-study programs

Funding: The United States Federal Student Aid Office offers several types of financial aid to eligible postsecondary students: grants, scholarships, loans, and work-study. For most programs, financial aid is awarded based on student financial need, which takes into account a program’s cost of attendance and the student’s expected family contribution, as determined by the Free Application for Federal Student Aid. The Federal Work-Study (FWS) program allows students with financial need to work part-time jobs to finance part of their college education. Most FWS students are employed directly by institutions, but FWS also allows work-study students to work at federal, state or local public agencies, private non-profits or private for-profits. In most cases, schools or employers must contribute up to 50% of FWS student wages. Federal funds may cover a majority or all of FWS wages for students in specific jobs (e.g., reading and math tutors). For each institution, at least 7% of FWS funds must be spent on students working in community service jobs (e.g., tutoring, emergency response).

Academic Outcomes: FWS participation has a small, negative impact on first-year student GPA, especially for students who would not have worked without FWS funding.1 This suggests that some students may find it challenging to balance their academic and work responsibilities, especially during the first year of school. Despite minor reductions in GPA, FWS students tend to complete more credit hours than their non-FWS peers and are more likely to continue their education through graduation.1 Positive effects of the FWS program are strongest for low-income students who attend public institutions (Figure 1).1

The retention effects of work- study programs are typically most pronounced in the first two years of college, after which on-campus employment outside of financial aid programs has a stronger retention effect.2 Compared to work study assistance, merit- based scholarships seem to have the strongest reduction of college stopout, especially during the first few years of school.3

Workforce Outcomes: FWS is associated with slightly improved job placement immediately after graduation. These benefits are most pronounced for students who would not have worked during college if they had not received FWS funds.1 Because most FWS students work in on-campus jobs, most work-study jobs are not directly related to a student’s preferred career path and may not provide all of the experience required for a student to get a job in one’s chosen field after graduation. In 2019, the U.S. Department of Education announced the FWS Experimental Sites Initiative (ESI). Experimental sites are meant to encourage schools to offer work-study opportunities in the private sector and try creative ways to increase work-based learning that isrelevant to students’ career goals. Around 200 institutions were invited to participate as experimental sites in February 2020, but the Department of Education has not yet released a list of confirmed participants. While no ESI outcomes data is available at this point, the Department of Education plans to assess how changes to FWS regulations affect university partnerships with private businesses, work-based learning opportunities, FWS award acceptance, student outcomes and post college employment outcomes.4

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Figure 1. Impacts of Federal Work Study by Income. Compared to high-income students, low-income FWS students have better GPAs, improved bachelor's completion rates and slightly higher rates of employment after graduation.

State-funded work-study programs in the United States

Funding: In addition to FWS funding, state funding for work-study programs can provide institutions with additional financial support to offer work-study jobs to in-state students. Between 2018-19, twelve states (CO, FL, ID, IN, KS, MN, MT, NV, NM, PA, TX, WA) spent a total of $76.5 million on state-funded work-study programs.5 This represents approximately 0.5% of all undergraduate state aid (0.4% for graduates). Currently, CO ($20 million), MN ($15 million), WA ($12 million), PA ($10.6 million), and TX ($8.5 million) spend the most money on their programs, making up more than 85% of total state spending on work-study programs. Iowa also has a program in statute but it has not been funded for several years. For additional details about state work-study programs, see Supplementary Table 1: State Work-Study Programs Overview.

Academic Outcomes: There is very limited research to determine the impact of state-funded work-study programs on academic performance. In Indiana (2018-19 funding: $841,000), participation in the statewide work-study program was linked to increased college persistence, perhaps due to the better integration of these students into their campus communities.6 Given that eligibility criteria and funding levels vary significantly across states, it is difficult to make conclusions about how statewide work-study programs influence academic or workforce outcomes across states and compared to FWS.

Workforce Outcomes: State work-study funding can be used to more strongly incentivize schools to partner with external employers. For example, Minnesota’s program requires that schools use state work-study grants to “make a reasonable effort to place work-study students in employment with eligible employers outside the institution” (Minnesota Statute 136A.233). Florida’s program funds 70% of private employer costs, and 100% of employer costs at public educational institutions (Florida Statute 1009.77). State funding can also be used to encourage schools to provide more work-study jobs that closely link to students’ career paths. The law in Texas, for example, requires institutions to use state funds to “provide, insofar as is practicable,employment to an eligible student that is related to the student's academic interests” (Texas Statute 56.074). The Kansas work-study program includes a required career component to “promote, stimulate and assist in the part-time employment of eligible students in jobs or positions of service that will complement and enhance the educational preparation of such students for a career” (Kansas Statute 74-3274).

Work-study programs in Missouri

Most Missouri postsecondary institutions participate in the FWS program, and institutions can distribute FWS funds to students, as available, based on their financial need. Missouri does not currently fund a statewide work-study program. In 2020, House Bill 1430 proposed the creation of a state-funded work-study program in which Missouri employers would receive a wage subsidy for paying participating students. The bill passed unanimously out of the House Higher Education committee and was supported by groups including the Missouri Chamber of Commerce, Missouri Community College Association and the Council on Public Higher Education. In the absence of a statewide work-study program to facilitate connections between college students and employers, students, employers and educators in Missouri can use the Missouri Intern Connect to identify and fill internships across the state. However, unlike a statewide work-study program, Missouri Intern Connect does not provide any incentives to employers (e.g., wage subsidies, tax breaks) to hire college students.

References

  1. Scott-Clayton, J. E., & Zhou, Y. (2017). Does the Federal Work-Study Program Really Work—and for Whom? Center for Analysis of Postsecondary Education and Employment. Teachers College, Columbia University. Retrieved from https://academiccommons.columbia.edu/doi/10.7916/D8Z03FF2.
  2. DesJardins, S. L., Ahlburg, D. A., & McCall, B. P. (2002). Simulating the longitudinal effects of changes in financial aid on student departure from college. Journal of Human Resources, 653-679. https://doi.org/10.2307/3069685.
  3. DesJardins, S. L., & McCall, B. P. (2010). Simulating the effects of financial aid packages on college student stopout, reenrollment spells, and graduation chances. The Review of Higher Education, 33(4), 513-541. Retrieved from https://eric.ed.gov/?id=EJ888281.
  4. Notice Inviting Postsecondary Educational Institutions To Participate in Experiments Under the Experimental Sites Initiative; Federal Student Financial Assistance Programs Under Title IV of the Higher Education Act of 1965, as Amended. 84 Fed. Reg. 23779 (May 23,2019). Retrieved from https://fsapartners.ed.gov/sites/default/files/attachments/2019-08/FR052319ESI.pdf.
  5. National Association of State Student Grant and Aid Programs. (2019). 50th Annual Survey Report on State-Sponsored Student Financial Aid, 2018-2019 Academic Year. Retrieved from https://www.nassgapsurvey.com/survey_reports/2018- 2019-50th.pdf.
  6. St. John, E. P., Hu, S., & Weber, J. (2001). State policy and the affordability of public higher education: The influence of state grants on persistence in Indiana. Research in Higher Education, 42(4), 401-428. https://doi.org/10.1023/A:1011002808866.
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