Does Student Financial Aid Count as Income for Benefits?

Only certain forms of college student financial aid count as income for government benefits such as food stamps and Medicaid.

Financial aid can include student loans, grants, scholarships, stipends, and work-study programs.

Student loans do not count as income for these two benefits, but be careful to avoid resource limitations if you borrow extra money to pay living expenses not billed by your school.

Funds held in a bank account could cause you to lose valuable benefits.

College work-study programs typically count as income, but your participation helps with food stamps eligibility while sometimes impacting Medicaid qualifications.

Financial Aid & Food Stamps

The answer to whether college financial aid counts as income for food stamps is secondary. Most students are ineligible for the Supplemental Nutrition Assistance Program (SNAP) if attending school at least half-time unless they meet an exemption and all other eligibility requirements.

Find the complete list of SNAP exemptions for students here.

Student Loans

Student loans never count as income for food stamps because the money that you borrow does not represent earnings. However, be careful to avoid disqualifying yourself by exceeding the resource limits if your school deposits excess funding into your checking account.

SNAP qualifying criteria include a $2,500 resource limit for money held in a bank account. Student loan proceeds go to the college first to pay tuition, lab fees, and dormitory expenses.

Colleges often pass excess (unspent) loan proceeds to the student to fund living expenses, such as off-campus housing, transportation, insurance, etc. You might disqualify yourself if you hold more than $2,500 of this extra money in a bank account. 

Pell Grants

Food stamps do not consider Pell Grants as income even though the student does not have to repay the money to the federal government. However, Pell Grant recipients are more likely to qualify under a temporary exemption connected with the COVID-19 public health emergency.

Students with an Expected Family Contribution (EFC) of zero are eligible for SNAP benefits per the Consolidated Appropriations Act. Pell Grant recipients have an EFC of zero.

Pell Grants recipients will have to meet the narrower list of student exceptions 30 days after the public health emergency officially ends.

Work Study

Work-study earnings count as income when applying for food stamps. However, SNAP rules list participation in a state or federally financed program as a permanent exemption for college students.

In other words, work-study programs have a counterbalancing effect. Participating helps you to qualify, provided you do not earn more than the gross monthly limits.

Also, eligibility for a work-study program is a temporary exemption for college students during the COVID public health emergency – even if you are not earning money.

SSI

Many young adults wonder how they can get Supplemental Security Income (SSI) and Food Stamps as college students. The answer lies in the intersection of the SNAP and SSI eligibility criteria.

  1. The SSI program provides monthly payments to adults and children who are blind or disabled.
  2. One of the SNAP permanent exclusions for college students is having a mental or physical disability.
  3. The average monthly payment for SSI falls comfortably under the SNAP income limit

Therefore, disabled college students can get food stamps and SSI while attending school, even if they receive financial aid (loans, Pell grants, scholarships, or work-study programs).

Financial Aid & Medicaid

College financial aid can sometimes affect eligibility when applying for Medicaid. Of course, the student must support themselves without a parent claiming them as a dependent on their taxes.

Medicaid provides free dental insurance and healthcare to low-income families. However, the qualification rules vary by state for work-study programs and student loans.

Medicaid Loans

Student loans do not count as income for Medicaid. But any excess funding deposited into your bank account could make you ineligible if you reside in a state that has not expanded eligibility under the Affordable Care Act.

  • In expansion states, you qualify based on income alone if under 138% of the Federal Poverty Level (FPL), with no resource limitations.
  • In non-expansion states, you qualify based on income and other factors, including countable resources.

As noted above, colleges routinely transfer unspent loan dollars to students to help them fund living expenses: off-campus housing, food, transportation, etc. Money held in a bank account could make you ineligible if your state has not expanded Medicaid.

Non-Expansion State 2022

AlabamaFloridaGeorgia
KansasMississippiNorth Carolina
South CarolinaSouth DakotaTennessee
TexasWisconsinWyoming

Medicaid Work-Study

Participation in a student work-study program counts as income for Medicaid. However, the amount you can earn before making yourself ineligible varies by state and increases for pregnant women.