Eligibility reaches further up than most readers expect. 34 CFR 675.9 requires a student to meet the general title IV eligibility requirements, to be "enrolled or accepted for enrollment as an undergraduate, graduate or professional student at the institution", and to have financial need determined under Part F of Title IV. Graduate and professional students are named in the regulation, and 20 U.S.C. 1087-51(a) says the same. Given how much graduate borrowing capacity contracted in 2026, that is worth knowing rather than assuming the program is undergraduate-only.
It is paid as an hourly wage, and the regulation is strict about that. Under 34 CFR 675.24(a)(1) an institution "shall compute FWS compensation on an hourly wage basis for actual time on the job" and "may not pay a student a salary, commission, or fee". Paragraph (a)(2) forbids counting fringe benefits toward the wage rate, and (a)(3) makes one exception, allowing a graduate student employed by the institution to be paid a salary or an hourly wage in line with the institution's usual practice. The floor is set by reference rather than by a number: 675.24(b) provides that "the minimum wage rate for a student employee under the FWS program is the minimum wage rate required under section 6(a) of the Fair Labor Standards Act of 1938". A state or local minimum wage can be higher, and where it is, ordinary wage law applies to the job like any other.
Somebody has to match the federal money, and that is a real constraint on supply. Section 675.26(a)(1) caps the federal share of a student's compensation at 75 percent for employment other than by a private for-profit organization, subject to two upward exceptions: (a)(2) allows up to 90 percent for a student placed with an independent non-profit or public agency selected case-by-case that "would otherwise be unable to afford the costs of this employment", capped at 10 percent of the institution's FWS students, and (d) authorizes a 100 percent federal share for certain designated institutions and for specified reading, family-literacy, mathematics-tutoring and civic-education work. For a private for-profit employer the federal share is capped at 50 percent by (a)(3), and 675.23(b)(2)(i) requires that employer to provide the non-federal share itself.
The four employer types, and the one nobody expects. Under 34 CFR 675.20(a) a student may be employed by the institution itself, a federal, state or local public agency, a private non-profit organization, or a private for-profit organization. The for-profit route carries its own conditions in 675.23: no more than 25 percent of the institution's allocation may go to it, and the work "must be academically relevant to the student's educational program, to the maximum extent practicable". Public agency and non-profit work has to be "in the public interest" under 675.22, which excludes work primarily benefiting a limited-membership organization, work as a political aide, partisan or non-partisan political activity, and lobbying. And 675.18(g)(1) requires an institution to spend "at least seven percent" of its initial plus supplemental allocation on community-service employment, including at least one reading tutoring project for young children.
How the earnings interact with the aid package, which is the part that trips people. Section 675.25(a)(1) applies "attributed earnings" to cost of attendance, and defines them as gross earnings minus taxes and job-related costs, where job-related costs are "costs the student incurs because of his or her job" such as uniforms and transportation to and from work. Earnings from a vacation period when the student is not attending classes apply to the next period of enrollment rather than the current one, under (b). And under 34 CFR 673.5(e)(1) an institution may fund the employment only "until the amount of the FWS award has been earned or until the student's financial need ... is met", with (e)(2) allowing it to continue funding a student whose need has been met only until cumulative earnings from all need-based employment after that point exceed $300. So the job has a ceiling written into the rules and the ceiling can arrive before the semester does.
What happens to the earnings on next year's aid application, and what happens to payroll tax. Federal aid law excludes them: 20 U.S.C. 1087vv(e)(3) defines "excludable income", which is subtracted from total income, to include "income earned from work under part C of this subchapter", and Part C is the Federal Work-Study program. So work-study wages do not raise the following year's Student Aid Index the way other earnings would. Payroll tax is a separate question with a different answer depending on who signs the paycheck. The student exception at 26 U.S.C. 3121(b)(10) excludes from employment, and so from Social Security and Medicare tax, service performed in the employ of "a school, college, or university" by "a student who is enrolled and regularly attending classes" there. A job with the college itself can fall inside it, as can one with a closely affiliated supporting organization the same paragraph describes; an ordinary outside public agency, non-profit or for-profit employer is not the school and so falls outside it. Note also that the exception is not automatic even on campus: the paragraph carves out a state school whose student employees are covered by that state's agreement with the Social Security Administration. The regulation assumes as much, since 675.20(b)(4) and 675.26(b)(2) both contemplate "the employer's share of social security". Federal income tax applies to the wages either way.
