While political leaders in Washington, D.C. continue to battle over how to deal with the nation’s ongoing economic crisis, millions of college students are back in school trying to manage their own financial crisis—the increasing cost of attending college.

Average college tuition and fees continue to rise well above inflation and the price of other goods and services—a relentless trend we’ve seen for the past three decades. The most recent data available indicate that freshman who started their education at a public four year college in 2009 saw their tuition and fees rise by an average of $555 (a 7.9 percent increase above inflation) by the time they started their sophomore year.  

With college costs increasing and aid diminishing, it is critical that we protect existing student aid programs and ensure they’re reaching the students with the greatest financial need. Federal Work Study (FWS) is one such program that needs attention and scrutiny if it is to remain an effective support for low-income students.

Given the bleak picture of financial aid and exceptionally high unemployment rates, especially for young people and individuals without a postsecondary credential, FWS remains a valuable asset for low-income students. The program helps these students pay for their education through part-time employment. In particular, colleges and universities that receive FWS funds “award” a certain amount of money to eligible students, who then look for work study jobs to earn their award.  

Work study jobs also provide benefits to students that regular jobs can’t offer, such as more flexibility. Employers cannot schedule work hours during students’ class time and, according to the statute, work study jobs should, “reinforce the educational program or vocational goals of each student receiving assistance.”

This program has only become more important as students have lost other forms of support. The Summer Pell, an indispensable grant for many low- and moderate income students, was eliminated in 2010. Millions of low- and moderate-income students are also seeing their state grants slashed or eliminated as a result of state budget shortfalls. At least half the states made significant cuts in higher education for the 2012 fiscal year.

Yet although college enrollment has soared and state budgets have tightened, FWS funding has remained stagnant, falling far short of student demand. Federal Work Study constitutes only one percent of total undergraduate student aid. In 2007-08, 7.4 percent of undergraduates received FWS. Yet 75 percent of postsecondary students worked regular jobs while being enrolled that same year, and among those working, about two thirds (63 percent) said they could not afford school without work. 

Despite its importance, a closer look at who benefits from FWS reveals that considerable program changes are needed in order to ensure the program is reaching the students with the greatest financial need. 

First, the FWS allocation formula does not give proper weight to the percentage of low-income students enrolled at an institution. Colleges enrolling the largest numbers of low-income students are receiving disproportionately lower amounts of FWS funding. Community colleges, which enroll the largest percentage of dependent students from modest backgrounds received only 13 percent of FWS disbursements in the same year. By comparison, private non-profit four-year universities, which enrolled only 12 percent of students from low-income backgrounds in 2007-08, received 46 percent of FWS funds.  Not surprisingly, while 3.4 percent of community college students held a work-study job in 2007-08, 22.8 percent of private non-profit four-year students held a work-study job. In fact, eight of the ten top recipients of FWS disbursements in 2007-08 were private non-profit four-year institutions, most of which have incredible wealth (Table 1).

Table 1:

The problem of inequitable access between institutions becomes magnified by the fact that eligibility rules do not ensure that only low-income students receive FWS. To be eligible, students must demonstrate “financial need”, which is measured through the total cost of attendance minus the family’s estimated ability to pay. The very high cost of some institutions - an average of $36,993 for private non-profit four-years in 2010-2011 - means that even students from high-income families can have financial need. A quick look at the private institutions with the highest FWS funds shows that in 2007-08 they had more recipients of FWS awards than Pell Grant recipients, indicating that a good portion of their funds were distributed to students with greater means. 

In order to address current shortcomings within the FWS program, there are a few smart steps we can take. Allocations to FWS should be increased to meet the demand for the program and help students access the financial aid they need to complete their credentials. In addition, the allocation formula should be changed to ensure that the program reaches those students who need it the most.

While it is important that FWS funding increases to match the growing demand, it is just as important that the funds be directed to the neediest students.

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Viany Orozco is a policy analyst at Demos.

Lucy Mayo is the interim director of the Economic Opportunity Program at Demos.