Should Your Teen Get a Summer Job or Unpaid Internship?
A surprising trend has emerged in the U. S. labor force in recent years — fewer teenagers are working at part-time or summer jobs, according to The New York Times. Even though the job market is tight and many employers like fast food restaurants are seeing a shortage of workers, fewer teenagers are working.
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The labor force participation rate among teenagers ages 16-19 has dropped significantly in recent years. According to Bureau of Labor Statistics data cited by the Federal Reserve Bank of St. Louis, in June 2017, only 35.8 percent of people ages 16-19 had a job, while 20 years ago, in June 1997, that percentage was 51.2 percent.
What happened over the past 20-25 years? Are today’s teenagers too busy playing video games and spending time on social media to find a job? Or are there larger economic forces at work that have made low-wage, part-time work into an inefficient means to prepare for college?
One possible explanation for the lower labor force participation rate of today’s teenagers is that they are more focused on their education — they are spending more time in school and on school-related activities than previous generations. The definition of what it means to “get ready for college” may have changed.
According to the Bureau of Labor Statistics, teens today are spending more time in school (even during summers), taking more rigorous academic classes and spending more time studying and doing extracurricular activities than previous generations — and higher-educated parents today are more likely to prefer that their kids do not have a job, and instead spend their time on school and related activities.
Today’s parents are left wondering whether they should encourage their kids to work at paid employment or spend their time at unpaid internships or volunteer enrichment experiences. After all, previous generations of high school kids used part-time jobs as a way to gain work experience, build career skills and earn extra income to help pay for cars, clothes and college tuition.
This begs the question: Which qualifies as better college prep for your teenager — a summer job or unpaid internship?
Part-time jobs don’t cover today’s college costs
Thirty years ago, it used to be possible to pay for college tuition, fees and room and board while earning a minimum wage at a part-time job. According to MarketWatch, the average price of an undergraduate degree has increased by 161 percent since 1987, and part-time jobs’ wages have not kept up.
For example, in 1987, the four-year price of in-state tuition, fees and housing at the University of Central Florida was $33,100. Back then, a student earning minimum wage and working 20 hours per week could have earned enough money to cover 106.5 percent of the costs of their college education at the University of Central Florida — in 2016, that same part-time minimum wage job would only cover 68.2 percent of the costs of college.
Part-time jobs can reduce your financial aid
Mike Bink, founder and director of college planning at Equivest Financial Advisors, says that, in general, “In terms of improving your financial aid eligibility, a kid having a summer job is probably likely to hurt more than it helps. There’s no such thing as having ‘too much money’ for college, but there’s a right way and a wrong way to manage it. Any assets that are in a child’s name, such as savings or investments, are treated more harshly when it comes to financial aid than parents’ assets are.”
Every year, families that are planning to send their kids to college fill out the Free Application for Federal Student Aid (FAFSA) to go through a complex calculation to see how much money they are expected to pay toward their children’s college costs — this is known as the Expected Family Contribution (EFC).
One of the factors that goes into the EFC is the student’s own income — the EFC formula includes an allowance of $6,570 for the student “income protection allowance.” That means your student is allowed to earn $6,570 per year without affecting their eligibility for financial aid, but if your student earns more than that, the overage gets factored into the financial aid calculation.
“Any income that your student earns that is over that $6,570 threshold, 50 percent of the student’s additional income gets added to the Expected Family Contribution,” Bink says. “If your teenager is earning ‘too much money,’ they’re losing 50 cents on the dollar of financial aid eligibility for every dollar they make over that limit.”
Depending on your family income and overall financial situation, your student might be better off working less and qualifying for more financial aid.
In June 2017, only 35.8% of people ages 16-19 had a job. Twenty years earlier, in June 1997, that percentage was 51.2%.
Teens: Give your summer job money to your parents
If your teenager does have a summer job or part-time job to save for college, Bink recommends doing something that every parent has dreamed of: The kids should give their money to their parents. (And then the parents can save the money in a 529 college savings plan, which is in the parents’ names.)
“If a student is saving money for college, it would be advantageous for the student to give that money to their parents, and have the parents invest that money in the 529 plan that the parents have opened up,” Bink says. “Of course, it depends on how well you can trust your parents! But purely from a financial aid calculation standpoint, that is the best way to utilize those savings.” (And depending on which state you reside in, your parents may get a state income tax break as well.)
Use summers for learning experiences — paid or unpaid
Kristen Moon is the founder of Moon Prep, a college admissions counseling firm that helps guide students and families through the undergraduate admissions process. She says that instead of worrying about using teenage job income to pay for tuition (which often doesn’t make a meaningful difference and can even hurt financial aid eligibility), it’s better to use teenage work experiences to prepare for college and build up your child’s college application resume by learning more about specific careers and fields of study.
“A great summer job is one that can provide hands-on learning experiences, especially in your student’s interested field of study,” Moon says. “Job shadowing and internships are a great way to gain this type of real-world experience. If your child aspires to be a dentist or a pediatrician, then they could do a job shadowing experience. Job shadowing will be a perfect way to get hands-on experience in a clinical setting. These jobs may not pay, but the hands-on learning may be invaluable. Paid or unpaid is typically less important, as both can be learning experiences. I would focus on the opportunity and not so much on the money aspect.”
Moon recommends that your teenagers ask themselves the following questions before taking a summer job or unpaid internship experience:
- Can I grow as a leader and have the opportunity to take on leadership roles?
- Will I hone my customer service skills?
- Will this stretch me to go out of my comfort zone and help me grow as a person?
- Will this opportunity help me explore future potential careers?
- What industry do I want to learn more about?
The world of college savings and preparation for college can seem more complicated than ever, and the old rules of getting a summer job don’t always apply for today’s teens. But with careful planning (don’t earn “too much money” when applying for financial aid) and a bit of creative strategy (focus on work experiences that help students learn about careers or majors they’re interested in; consider saving summer job earnings in a 529 plan), your family may be able to maximize college affordability while reducing stress along the way.
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