This FWS reminder covers the underuse penalty and waiver, transfer of campus-based funds, carry back and carry forward, and more.
By Siobahn Arbogast
This is the first of two blogs pertaining to Federal Work Study. This article focuses on allocation of funds, as well as requirements related to employing and paying FWS students. The second blog will discuss eligible jobs and the federal and nonfederal share of earnings.
Here are reminders for Federal Work Study requirements (this is not new guidance).
Allocation
- A school approved for FWS will receive an initial allocation. That school might also receive a supplemental allocation. If one is received, the supplemental allocation must be used for community service FWS positions.
Underuse Penalty and Waiver
- If a college returns more than 10 percent of its allocated FWS funds, the Department of Education will reduce the 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 school’s control.
- A school 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 a college has requested and received supplemental FWS funds, they must spend 100 percent of the supplemental amount on community service positions. If a college doesn’t meet the community service requirements, it must return the difference between the amount it should have spent for community service and what it actually spent, unless the school requests and receives a waiver of community service requirements from the Department of Education.
Transfer of Campus-Based Funds
- A college 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.
- A school can also transfer up to 25 percent of its FWS allocation (initial and supplemental) to FSEOG. However, to transfer FWS funds to FSEOG, the school must have awarded and disbursed funds to students for both programs for that award year.
Carry Forward and Carry Back
- A school may spend up to 10 percent of its allocation (initial and supplemental) for FSEOG or FWS in the following award year to pay like funds. A school may also spend up to 10 percent of its allocation (initial and supplemental) for FSEOG or FWS to pay like funds in the previous award year.
- Separately, a college can carry back FSEOG or 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 before the beginning of the current award year (July 1). For FSEOG, it is any payment period with a May 1 or later start date. This carry-back is in addition to the allowable 10 percent carry-back of the current year’s FSEOG or FWS allocation to be used to pay FWS expenses in the prior award year.
- 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, a work-study student cannot be paid less than they would be if they weren’t 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 isn’t a prohibition from paying overtime. You cannot use FWS to provide fringe benefits (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 school 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.
- Schools 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. A school using an electronic process for recording hours must still have the hours certified by the supervisor. The certification also must satisfy the standards of the E-sign Act.
- FWS students must be paid at least once per month. Additionally, for payroll purposes, the FWS students should be entered in a separate sub-ledger or 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.
Siobahn Arbogast is Global’s Director of Title IV Accounting
October 8, 2025
Information is subject to change.