Your browser does not support JavaScript

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.

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-time 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.  The work need not be paid or even necessarily 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.

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 an imputed student contribution for 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. Students who do not work due a documented medical circumstance can appeal for a summer work waiver.

Please note that self employment does not meet the summer work requirement and an imputed student contribution from summer income will be calculated for the number of weeks not worked. If you have any question about your summer employment, contact our office for clarification of our policy.

It should also be noted that we will extend an exception to the summer work requirement to students in any degree-granting academic program that requires summer enrollment or summer academic work such as PhD dissertation research. To qualify for a waiver of the summer work requirement, a student must:

  • Be enrolled in a degree-granting graduate program, either an approved joint degree or ad-hoc degree program, or a concurrent degree program, and
  • Provide documentation
    • via an official school transcript, showing that the student was either enrolled for at least 8 weeks during the summer, or
    • via a statement from an academic advisor or other school official, verifying that the student performed at least 8 weeks of full-time academic-related research work during the summer

This exception will be granted for one JD summer only. For all students who do academic work for more than one summer, Student Financial Services will impute a student contribution at the rate for rising 3L students.

Individual classes or coursework completed for non-degree programs (i.e., language studies, independent research) do not qualify for the summer work requirement exception.

Any summer income from any source must be reported to Student Financial Services, even for students who request and receive a waiver of the summer work requirement.

The general categories of special programs to which this policy applies are: /dept/academics/degree-programs/special-programs/

Students in these programs receive a reduced time to degree or the option to petition for a leave to attend another degree-granting institution.

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

We exempt entering 1Ls from the 8-week work requirement. However, regardless of the length of summer work or the amount of money earned, all entering 1Ls are expected to contribute a minimum of $2,500 towards the cost of their education during their 1L year, whether or not they choose to work. A minimum contribution is a common practice typically followed at law schools with need-based financial aid programs, in order to provide an equal incentive for all incoming students to work. Students can borrow, if needed, through a student loan program to replace the $2,500 minimum contribution.

Transfer students, like entering 1L students, are assessed a minimum contribution of $2,500 toward the cost of their education during the 2L year if they do not work at all in the summer before enrolling. Transfer students who work for fewer than 8 weeks in the summer will be assessed a prorated minimum contribution of $312.50 ($2,500 divided by 8) for each week fewer than 8 total weeks worked.

NOTE to 1Ls who were teachers in 17-18: 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 2017-18 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 full-time 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 2018, the imputed contribution for each class is:

  • Minimum Contribution for rising 2Ls: $800/week not worked
  • Minimum Contribution for rising 3Ls: $1,600/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 (without dependent children) 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. Students with dependents should review the information on Students with Dependent Children and reach out to our office with any questions.

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 ($8,000 in 2018) are subtracted from their gross income.

Summer 2018 Gross Income (max. 12 weeks)
Less Taxes (see below to estimate taxes)
Less Base Summer Living Allowance ($8,000 in 2018)

Equals Net Income
Times 90%

Equals Student Contribution From Income

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.

  • Federal Tax

    • Step One: Determine Standard Deduction (based on 2017 deductions) and deduct from Gross Summer Income
      • $6,350 Single
      • $12,700 Married Filing Jointly
      • $6,350 Married Filing Separately
      • $9,350 Head of Household
    • Step Two: Subtract Personal Exemption (number of family members including you, your spouse, and children, multiplied by $4,050) 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
  • State Tax

    • Step One: Determine State Tax of State of Summer Employment
    • Step Two: Multiply Tax Rate by Gross Income
  • FICA Tax

    • 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 $8,000 by the Financial Aid Committee. Please note that $8,000 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 $6,350, and a federal personal exemption of $4,050. 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 (without dependent children) 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 $984 are based on the federal tax table for a net income of $9,600 (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 totaled to get an overall estimated tax burden of $3,314.

Estimated Post-Tax Income: The estimated total tax burden ($3,314) is subtracted from the gross summer income of $20,000 to get $16,686 in estimated post-tax income.

Base Summer Living Allowance: The base SLA of $8,000 is then deducted from the $16,686 est. post-tax income. The resulting $8,686 becomes the Estimated Net Income — the total amount available for your summer contribution to fund your legal education.

Additional SLA Protection: In a final set of calculations, an additional 10% of the Estimated Net Income is protected ($8,686 x 10% = $868.6).

Assessed Contribution: From the Estimate Net Income of $8,686, subtract the additional protected 10% ($868.6). This new amount rounded to the 10s is the assessed SC from summer income: $7,820.

Effective SLA: Of your post-tax income of $16,686, your effective SLA is $8,866 (Based on the Base SLA ($8,000) plus the additional income protected ($868.8)).

Example 3: Gross Summer Income = $35,000

Taxes: Federal taxes of $3,234 are based on the federal tax table for a net income of $24,600 (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 totaled to get an overall estimated tax burden of $7,312.

Estimated Post-Tax Income: The estimated total tax burden ($7,312) is subtracted from the gross summer income of $35,000 to get $27,688 in estimated post-tax income.

Base Summer Living Allowance: The base SLA of $8,000 is then deducted from the $27,688 est. post-tax income. The resulting $19,688 becomes the Estimated Net Income — the total amount available for your summer contribution to fund your legal education.

Additional SLA Protection: In a final set of calculations, an additional 10% of the Estimated Net Income is protected ($19,688 x 10% = $1,968.8).

Assessed Contribution: From the Estimate Net Income of $19,688, subtract the additional protected 10% ($1,968). This new amount rounded to the 10s is the assessed SC from summer income: $17,720.

Effective SLA: Of your post-tax income of $27,688, your effective SLA is $9,968 (Based on the Base SLA ($8,000) plus the additional income protected ($1,968)).

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 during the Update Process in the Fall
  • 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 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”). 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.

Grant Increase:

  • 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 student billing account will be refunded to you via cash advance in the form of a mailed check or, if you elect, via direct deposit to your bank account.

Grant Decrease:

  • If your grant goes down as a result of the Fall Update process, a charge in the same amount of the decrease will show on your student billing account. This charge will be added to any already existing balance on your next Account Notice. You will either need to pay this amount in full by the due date listed or apply for additional loan assistance from one of the supplemental loan programs listed here.

Appeals

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. Both federal regulations and HLS aid policy require students to notify Student Financial Services of the following changes that may occur at any time during the academic year (June 1, 2018 through May 31, 2019).

Required: Students who have experienced any of the following MUST file a formal appeal:

  • Changes in your 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 under the “Links” drop-down menu in the SFS Self-Service Portal.

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 2018 — May 2019) 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.