General Overview of Treatment of Income
Although government regulations specify that student eligibility for federal funds be based on the previous tax year information, we base eligibility for institutional funds on a more accurate “projected year” analysis based on your income in the current year. To determine eligibility for sets of funds, we perform two different file reviews on each student: one that conforms with federal guidelines which we use to determine eligibility for federal loans, and another which allows us to use a broader analysis and incorporate our own institutional policies to determine eligibility for our institutional grant and loan assistance.
The Law School’s projected-year analysis uses the twelve-month period running from the summer immediately proceeding the academic year for which the student is seeking assistance through the end of the 9-month academic year. In this way we can base the calculation of your student contribution from income on only your summer income.
You can use the HLS Estimated Student Contribution from Summer Income Calculator to to get an estimate of your student contribution from income. This calculator is accurate for single students only.
8-Week Work Requirement
To ensure equity in setting student contributions from income, Harvard Law School expects that students seeking financial assistance will work a minimum of 8 full weeks during the summer and will save a substantial portion of their income, less taxes paid and a standard summer living allowance, to contribute toward their education expenses.Â The work need not be paid or even necesarily in a legal field, but it must be full-time and for the full 8 weeks. Students who take unpaid positions will need to provide documentation from their supervisors confirming the dates and hours worked.Â
Working Fewer Than 8 Weeks or Choosing Not to Work at All
As mentioned above, HLS financial aid policy assumes that students will work for a minimum of 8 weeks in the summer. While most students either work as a summer associate in a private law firm or apply for funding from our Summer Public Interest Program to work in a public interest law job, we do not require you to do either of these. The only requirement is that you work in some capacity. You can volunteer, work for little pay or work in a non law-related job if circumstances require you do to so.
Since eligibility for HLS Grant assistance is directly related to the student contribution from income, Student Financial Services will assess a student contribution based on imputed income from students who do not meet the 8-week work requirement. It would be unfair for a student to decide not to work and as a result receive a larger grant than a student who did work the required 8 weeks.
HLS always requires a minimum of 8 weeks of summer work for financial aid purposes, with the following exceptions:
- Students in the joint HLS/SPH degree program.
- Students in the Cambridge/LLM degree program.
- Students in an approved joint JD/PhD program (at Harvard GSAS ONLY) if they indicate that they are doing PhD-related research in the summer.
- Students who are unable to work during the summer for documented medical reasons may appeal to the Financial Aid Committee for partial or full waiver of the 8-week work requirement.
Please note that other academic work — either independent (e.g., language studies, independent research) or toward other degrees or joint degrees — and all types of self employment do not meet the summer work requirement and an imputed student contribution from summer income will be calculated for the number of weeks not worked.
Working More Than the 8-Week Minimum
Many students choose to work more than the minimum of 8 weeks. If this is the case, our policy is to use all summer income in the calculation of the student contribution up to a maximum of 12 weeks. Should the total number of weeks worked exceed 12, the additional income beyond the twelfth week will not be factored into our analysis and students are free to use this money to offset future borrowing needs or to meet any additional summer expenses incurred beyond our standard summer living allowance.
Working More Than the 12 Week Maximum at Different Rates of Pay
As stated above, we look at a maximum of 12 weeks of work. However, if you work more than one job and each job has a different rate of pay, we use the highest paying job first when determining the total gross income to use in the calculation of your student contribution.
For example, let us say you work at one firm for 6 weeks and make $2,500/week (gross). You then work at another firm for 8 weeks and make $3,000/week (gross). You have worked a total of 14 weeks, but we will only use the top 12 weeks in the calculation of your contribution from income. The calculation of income to use would be constructed as follows:
- 8 weeks x $3,000 = $24,000; plus
- 4 weeks x $2,500 = $10,000; equals
- 12 weeks worked with a total gross income of $34,000
1L and Transfer Student Minimum Contribution from Income
While we expect entering 1Ls and transfer students to work during the summer before attending law school, we exempt them from the 8-week requirement; however, regardless of the length of summer work or the amount of money earned, all entering 1Ls and transfer students are expected to contribute a minimum of $2,500 towards the cost of their education during their 1L year. Even students who work all summer and do not make a significant amount of money will be assessed this minimum contribution of $2,500. This is a policy set by the Financial Aid Committee and is a common practice followed at most law schools with need-based financial aid programs.Â
NOTE: Because teaching income is paid in a variety of ways, for the sake of equity all incoming 1Ls leaving a teaching position will have their teaching income considered even if they have elected not to be paid during the summer. Typically, we divide the academic year salary by 52 and multiply the weekly rate by 12 to determine the income to be used in calculating the Student Contribution from Summer Income. For example, an incoming 1L leaving a teaching position that paid $45,000 for the 2014-15 academic year would have a weekly rate of $865.38 and we would use a total of $10,385 in summer income.
2L and 3L Minimum Contributions from Income
In the case of rising 2Ls and 3Ls, HLS imputes a minimum contribution for each week (or fraction of a week) under 8 weeks worked. The imputed amount is based on the average summer contribution from income by class year from the most recently completed summer. For summer 2014, the imputed contribution for each class was:
- Minimum Contribution for rising 2Ls: $630/week not worked
- Minimum Contribution for rising 3Ls: $1,530/week not worked
Exceptions to Work Requirement for Special Circumstances
While the Law School believes that instituting a policy of imputing a contribution for those who do not meet the work requirement is necessary to ensure fairness for everyone, we also recognize that there may be some situations that warrant an exception to this policy. If you are unable to work for either a medical reason or another compelling reason, we encourage you to speak to your Financial Aid Officer and/or submit information detailing your circumstances with your application.
Income Contributions from Public Interest Summer Work
Returning students who have completed the minimum work requirement, but have held a low-paying job (as is the case with many public interest jobs) and do not have income which exceed the basic summer living allowance will not be expected to contribute anything from their summer income. Please note that all students will continue to be assessed a student contribution from assets regardless of summer income earned. For more information, please see Student Contribution from Assets.
Basic Student Contribution from Income Formula (Single Students Only)
Students applying for law school assistance should plan to contribute approximately 90% of their income after both taxes and the base summer living allowance ($7,400 in 2014) are subtracted from their gross income.
||Summer 2014 Gross Income (max. 12 weeks)
||Taxes (see below to estimate taxes)
||Base Summer Living Allowance ($7,400 in 2014)
||Student Contribution From Income
The best way for single students to estimate the student contribution from summer income is to use the HLS Estimated Student Contribution from Summer Income Calculator. This calculator will produce results similar to the examples shown below.
Calculating Estimated Taxes
Note that most employers will typically withhold too much federal tax from a part-year salary, because withholding is typically based on the tax rate for an annualized projection of each pay period. You should ask to have less tax withheld if you will be working for only part of the year, such as the summer. IRS Publication 15-A describes the procedure for adjusting withholding for part-year employees on page 24. It’s up to you to request this in writing from your employer, and it’s up to the employer to do the alternate calculation and charge the correct withholding.
Also note that the software package we use to assess financial resources makes tax approximations based on federal, state, and FICA tax tables that have been adopted for the academic year as need analysis standards by schools nationwide. Due to the complexity of federal and state tax codes and the timing and frequency of changes to various tax codes, in most cases these are a close but inexact approximation of what a particular individual may actually pay in taxes. The need analysis standards also adjust the allowance for state tax by state, so that the student contribution of students with identical incomes but working in different states may vary according to the amount of state tax allowance used in the formula. It is important to understand that these adopted need analysis standards ensure that the student contribution assessment for students with equivalent incomes and identical situations (such as primary summer employment state, marital status, size of family) is done in a uniform way throughout the academic year.
- Step One: Determine Standard Deduction (based on 2013 deductions) and deduct from Gross Summer Income
- $6,100 Single
- $12,200 Married Filing Jointly
- $6,100 Married Filing Separately
- $8,950 Head of Household
- Step Two: Subtract Personal Exemption (number of family members including you, your spouse, and children, multiplied by $3,900) from Gross Summer Income
- Step Three: Estimated Federal Tax = typically 10% to 15% of remaining income, based on IRS tax table with higher percentages corresponding to higher income brackets
- Step One: Determine State Tax of State of Summer Employment
- Step Two: Multiply Tax Rate by Gross Income
- Multiply total gross income earned by flat rate of 7.65%
Summer Living Allowance
After analyzing actual summer expenses reported by students in the fall of the past academic year, the base summer living allowance (SLA) has been set at $7,400 by the Financial Aid Committee. Please note that $7,400 is the base allowance for every student regardless of income level. For students working at firms or in higher paying positions, the SLA effectively increases with income. The examples below assume the following: a single person working in the Commonwealth of Massachusetts, a standard federal deduction of $6,100, and a federal personal exemption of $3,900. For the sake of clarity, the figures are rounded.
Example 1: SPIF Position Only
SPIF Exception: Because the base SLA is more than adequate to offset any estimated net income, students working in a SPIF-funded position over the summer will not have their income assessed for a student contribution. This is the one case where the effective SLA is not higher than the base SLA. In fact, the effective SLA may be lower that the base SLA, because the total income for the summer (if the student has no other employment) will be lower than the SLA. In this case, the expected student contribution from income will be $0.
Example 2: Gross Summer Income = $20,000
Taxes: Federal taxes of $1,054 are based on the federal tax table for a net income of $10,000 (after the standard personal deduction and personal exemption). State taxes and FICA are both based on the original gross income of $20,000. The state tax allowance given for Massachusetts would be $800 and the 7.65% FICA allowance generates a FICA tax of $1,530. The federal, state, and FICA taxes are totalled to get an overall estimated tax burden of $3,384.
Estimated Post-Tax Income: The estimated total tax burden ($3,384) is subtracted from the gross summer income of $20,000 to get $16,616 in estimated post-tax income.
Base Summer Living Allowance: The base SLA of $7,400 is then deducted from the $16,616 est. post-tax income. The resulting $9,216 becomes the Estimated Net Income — the total amount available for your summer contribution to fund your legal education.
Additional SLA Protection & Assessed Contribution: In a final set of calculations, an additional 10% of the Estimated Net Income is protected ($9,216 – 10% = $8,294). This new amount ($8,294) is the assessed SC from summer income.
Effective SLA: Adding the additional income protected ($922) back to the Base SLA ($7,400) shows an effective SLA of $8,322.
- Estimated Total Taxes = $3,384
- Base SLA = $7,400
- Estimated Net Income = $9,216
- SC from Summer Income = $8,294
- Additional Summer Income Protection = $922
- Effective SLA = $8,322
Example 3: Gross Summer Income = $35,000
Taxes: Federal taxes of $3,304 are based on the federal tax table for a net income of $25,000 (after the standard personal deduction and personal exemption). State taxes and FICA are both based on the original gross income of $35,000. The state tax allowance given for Massachusetts would be $1,400 and the 7.65% FICA allowance generates a FICA tax of $2,678. The federal, state, and FICA taxes are totalled ($1,054 + $800 + $1,530) to get an overall estimated tax burden of $7,382.
Estimated Post-Tax Income: The estimated total tax burden ($7,382) is subtracted from the gross summer income of $35,000 to get $27,618 in estimated post-tax income.
Base Summer Living Allowance: The base SLA of $7,400 is then deducted from the $27,618 est. post-tax income. The resulting $20,218 becomes the Estimated Net Income — the total amount available for your summer contribution to fund your legal education.
Additional SLA Protection & Assessed Contribution: In a final set of calculations, an additional 10% of the Estimated Net Income is protected ($20,218 – 10% = $18,196). This new amount ($18,196) is the assessed SC from summer income.
Effective SLA: Adding the additional income protected ($2,022) back to the Base SLA ($7,400) shows an effective SLA of $9,422.
- Estimated Total Taxes = $7,382
- Base SLA = $7,400
- Estimated Net Income = $20,218
- SC from Summer Income = $18,196
- Additional Summer Income Protection = $2,022
- Effective SLA = $9,422
Summer Car Rental Allowance
An additional allowance may be approved by the Financial Aid Committee for individual students with documented summer car rental expenses under the following conditions:
- The student must demonstrate that s/he worked for at least 8 weeks in an area without access to adequate public transportation (train, subway, bus) and that not having access to a rental car would have presented a serious impediment to his/her ability to work.
- The student must provide documentation of the car rental expenses showing the full amount paid by the student.
- Students should submit documentation of the expense at the same time they submit the Summer Resource/Expense Update Web Form.
- The rental car allowance is intended to cover only the cost of basic car rental during the work period. Gas, tolls, maintenance, and other car expenses are not covered by this allowance. The total car rental allowance for the summer is capped at $1,500.
Fall Financial Aid Update Process
Every year Student Financial Services conducts a Fall Financial Aid Update Review to finalize financial aid awards. All students are required to submit the Summer Income & Expense Update form. The information provided on this form as well as any other required post-award documents are used to finalize our assessment of both your and your parents’ resources. This then allows us to finalize your award package and potential LIPP eligibility for the academic year. For more detailed information, please review Step 5 of the financial aid application process.
Potential Outcomes of the Fall Update Process
While many of our students see little to no change in their packages as a result of the Fall Update process, it is not uncommon for the package to change and the grant to either increase or decrease. The implications of such changes generally depend on the overall status of your full financial aid package prior to the Update process, particularly the following: 1) the accuracy of the total projected summer income (if married, this includes projection of your spouse’s income) versus the actual income, 2) whether or not your package is “at budget”, and 3) being able to confirm the enrollment of any siblings that were previously reported as “in school” via the Parent Financial Resources Web Form (this can have a significant impact on your financial aid package; for more information see “Assessed Parent Resources” for additional information). A package is considered to be “at budget” when the total value of current grants, awards, loans, etc. is equal to the total possible student budget. The key to understanding all the implications of the following scenarios is to recognize that federal and HLS regulations prohibit any student to be awarded a financial aid package in excess of their budget.
- If your grant increases as a result of the Fall Update process and there is NOT enough room in your student budget for the entire increase, then we must decrease some part of your package to award you the entire grant AND keep you within budget. In these cases, we examine your package as a whole and decrease the most expensive loan(s) first.
- If there is enough room in your budget to accommodate all of your increased grant, then the total amount of your package will go up. Any resulting credit on your termbill, will be refunded to you via a live check
- If your grant goes down as a result of the Fall Update process, a charge will show on your next termbill offsetting the original grant credit by the amount of the decrease. This charge will be added to any already existing balances on the next E-bill. You will either need to pay this amount in full by the next E-bill due date or apply for additional loan assistance from one of the supplemental loan programs listed here.
We recognize that even though awards are finalized after the Fall Update process (described above), circumstances may change at any time during the year and a student’s award package may have to be adjusted up or down as the situation dictates. Federal regulations and HLS aid policy both require students to notify Student Financial Services of the following changes that may occur at any time during the academic year (June 1, 2014 through May 31, 2015).
Required: Students who have experienced any of the following MUST file a formal appeal:
- Changes in you marital status (marriage, separation, divorce, etc.)
- Changes in your spouse’s employment
- Changes in your siblings’ school enrollment status
- New outside awards, fellowships, or scholarships not previously reported
- Increase in assets in excess of $3,000. For a list of assets requiring an update, see Types of Assets Considered.
In addition, there are other situations of life changes that may merit a re-examination of a student’s award package. These usually include the following optional bases for a formal appeal. If you have questions about a situation not listed here, please contact your financial aid officer for guidance.
Optional: Students MAY submit a formal appeal in any of these situations if they would like a reconsideration of their award package:
- Change in student family size resulting from the birth or adoption of a child
- Out of pocket student medical/dental expenses
- Unexpected student travel expenses resulting from a family or other emergency
- High student living expenses
- Out of pocket parent medical/dental expenses
- Change in parent financial circumstances or employment
- Change in parent marital status
- Ability to live below budget, or availability of additional resources: request to decrease base loan borrowing by a maximum of $4,000 (grant recipients only)
The formal appeal document can be found on the forms page of our website.
Married Student Information
Students who will be married during the school year are expected to report their spouse’s summer and academic year income (i.e., income from June 2014 — May 2015) as well as their own for the same periods. The Law School’s policy is to assume that the full income and resources of the spouse (or spouse-to-be) will be available to help meet both basic family living expenses and, if substantial enough, to help contribute towards the cost of the student’s legal education. For more information on the treatment of married students in our need analysis, please review the information on the page entitled Married Students and Students (Both Married Single) with Dependent Children.