Earning Money Through a Co-op


Professional educational co-ops can be a huge boon to college students. This arrangement will allow you to gain on-the-job experience while earning income. While that can sound incredibly tempting to students and their families, it’s important to understand the benefits and obligations of an educational co-op arrangement. Here’s a look at what you need to know about earning money through a co-op.

Advantages of educational co-ops

If you’re looking to graduate from college with less student loan debt than your peers, a co-op might be right for you. According to Troy Onink, a personal finance specialist and contributor to Forbes, many students earn between $11,000-$18,000 per six months of co-op experience. And after graduation, you’ll likely be able to command a higher salary based on your experience. On top of that, according to Gary J. Erwin, a contributor to CollegeXpress, of students who participate in educational co-ops, 95 percent land professional jobs shortly after graduation.

Financial aid benefits

In addition to providing income, an educational co-op can boost your finances more than a conventional job. Onink explains that the income earned via co-op has some distinct advantages over the paycheck you could earn from a run-of-the-mill job. According to FAFSA, the money you earn from a professional co-op doesn’t count against your financial aid eligibility. On the other hand, a paycheck from a regular job would cut into the tuition help that you could receive from your FAFSA application. As a result, a co-op makes it easier for you to pay your way through college and minimize your dependence on student loans.

Dodge the Kiddie Tax

Even if you come from a wealthy background, a co-op still has plenty of benefits. For instance, the Kiddie Tax applies to the unearned income of students age 18-24. According to this rule, all capital gains, dividends and interest under $1,900 will be taxed at the student’s typical tax rate, and earnings above $1,900 are taxed at your parents’ tax rate. However, you can avoid the Kiddie Tax by earning income to pay for half of your own financial support. In order to do this, Onink explains that means you’d have to earn half of your yearly college expenses through your co-op arrangement. With Onink’s estimate of $11,000-$18,000 per six-month period of work, earning half of your support seems possible for most students, depending on their tuition fees.

Understanding the obligations of a co-op program

An educational co-op is more demanding and rewarding than an internship program. While internships are often unpaid and part-time, co-op positions are full-time arrangements that typically last anywhere from three months to one year. During this time, you won’t be taking traditional classes. As a result, a college program that includes a co-op will typically take five years to graduate from, according to Michelle Clare, senior director of career education at the University of Cincinnati. And although college programs vary, many institutions won’t charge you tuition while you’re in an educational co-op. However, if you’re staying in the dorms, you’ll still have to cover your room and board expenses.

If you think a co-op would benefit your education and career path, consult with an advisor at your university to learn more about the opportunities available to you.

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