FWS Difficult to Administer

The Federal Work-Study (FWS) Program is one of the most difficult student aid programs to administer.  Schools that choose to match or place students in jobs ensure the various departments on campus obtain the desired workforce but often suffer the complaints of the “popular” departments (like the Recreation Center or Student Union) that must turn away students who did not get the desired match.  On the other hand, schools that allow the student to take their award to nearly any approved campus location suffer the complaints from the departments where no student chooses to work.  Financial aid offices also face criticism from departments that lost their best student because the FWS award was not renewed for the subsequent award year or because the student became overawarded and the FWS award had to be cancelled or reduced.  This is sometimes true even if the aid office gave its best efforts to notify students and departments of application priority deadlines.  While managing student and staff expectations is important, managing funds is perhaps more critical and more difficult.

The main goal is to ensure every federal dollar is spent in accordance with federal requirements or carried forward without over spending.  This is more difficult that it sounds and achieving 100 percent utilization often requires monthly monitoring and oversight.  One school found that the same percentage of students accepted FWS awards that had said no to Work-Study on the FAFSA as those who had said yes.  Intuitively, this makes sense for a school operating on a traditional calendar where the student may complete the FAFSA in March but not start the FWS job until August.  Those same students may find a better paying job or decide that FWS does not fit with their plans during those five months.  It is not surprising then that 30 percent of students nationwide turn down FWS awards.  Schools like the University of North Carolina at Wilmington have seen as many as 50 percent of its offers rejected and that percentage has climbed with the increase in average family income of admitted students.  Moreover, since students must actually work to receive the FWS award, most students will not earn 100 percent of the funds allocated to them.  So what does this mean for schools that may be penalized for under-spending and have to find their own funding source if they over-spend?  It may mean awarding more money than you have hoping that historical trends will be a good predictor of overall acceptance and earnings rates. 

This may seem like the airline industry's purported overbooking flights knowing what the historical “no show” rate is to achieve maximum capacity except there is less room for error with Work-Study.  For example, an institution which targets its FWS spending at $400,000 (combined federal and non-federal share) that has had historical acceptance rates of 60 percent and earning rates of 75 percent may need to initially offer as much as $888,888.  This is calculated by first taking the $400,000 target expenditures and dividing by .75 to factor out the awarded funds which you do not expect students to earn based on the historical earnings percentage which yields $533,333 as the target amount to get accepted.  Second, the target accepts amount is divided by .60 which reflects the historical acceptance rate to factor out the awards that will be rejected resulting in net offers of $888,888. Needless to say, awarding upwards of $800,000 when you only have $400,000 to spend can be gut wrenching.  This is especially true since a 5 percent variation in the assumptions used in the example above could result in overspending of $62,000 or underutilization of $58,000.  For many schools, however, too few FWS students when school starts may be a bigger problem than too many.  Often students who were not awarded FWS and want to work find other jobs and are not willing to accept a job if not given the opportunity early.  If that were not enough, you have to ensure that at least 7 percent of the allocation is spent on community service and that at least one student is employed as a reading tutor.  Those institutions that utilize 100 percent of their funds and comply with all program requirements deserve praise.