Payments to Students Guide

The College of William and Mary makes various payments to students for tuition and fees, teaching, research, other education-related activities and employment. In awarding and processing such payments, care must be taken to classify these payments correctly for expense classification, and tax purposes and the impact of the Affordable Care Act.  This document addresses types of payments made to both graduate and undergraduate students, including Scholarships, Fellowships, Stipends, Prizes and Awards, Compensation for Services and Reimbursements.  

Generally, when Scholarships/Fellowships are used by the student to offset tuition, required course fees, textbooks or mandatory equipment as provided for under Internal Revenue Code (IRC) Section 117, the payments may be excluded from income. The student is responsible for tracking the payments received and the costs of tuition and other required educational fees, books, supplies and equipment for purposes of identifying taxable income.

The student recipient may either be a US Taxpayer, meaning both United States students and Resident Aliens for tax reporting purposes hereinafter referred to as a U.S. Citizen, or a Non-Resident Alien for tax reporting purposes, hereinafter referred to as an NRA. The information the College must provide to the student recipient and/or IRS is determined according to: 1) the type of payment made and 2) whether the recipient is a US Taxpayer or an NRA.

The treatment of payments to NRA students may be further impacted depending on whether the student is from a country that has entered into a treaty with the United States. The systems used to make the various types of payments have been designed to appropriately identify NRA tax status. More information on NRA/foreign national treatment can be found below.

If payments are required to be reported by the College for tax purposes, the payment system will determine whether to use a Form W-2, 1098-T, 1099-MISC, or 1042-S to report the payment.

Key Concepts Relating to Student payments

 

Term

Definition

Qualified Scholarship/ Fellowships

This category includes payments to the student (those in a degree program) or credits to a student’s account used only for “qualified tuition and related expenses,” which are limited to tuition and required fees, books, supplies, or equipment.

Non-Qualified Scholarship / Fellowship

A non -qualified scholarship is a scholarship payment used for expenses that are not qualified tuition or related expenses (e.g. amounts used to pay optional fees, room, board, travel and personal expenses) at the discretion of the student.

A non-qualified fellowship is payment for a research fellowship.  The student will be expected to perform independent research. If the fellow is a student this research would be part of their educational pursuits. It is important to note that the student is performing independently and not under any direct supervision or direction. They may seek advice or assistance from colleagues, or may collaborate with others in their particular discipline; but the final decisions of what to do, how to proceed, and in what direction the research goes is decided by the fellow.

Graduate Assistantship

An academic job held by a graduate student, which involves paying for services rendered. Graduate assistantships can be classified as; Graduate Assistantships (GA’s), Teaching Assistantships (TA’s) and Research Assistantships (RA’s).  These types of individuals are performing services in order to receive compensation and are subject to the control of and supervised by an employee of the University making the payment taxable and reportable to the IRS.

Undergraduate Employment

If an undergraduate student is to receive payment for an event that occurred once, then it is a one-time payment.  If the student is continuing to work for an extended amount of time it is an hourly job.

Stipend

A stipend is used as a virtual catch-all category for a variety of payments but often takes the form of a subsistence allowance given to students to help defray living expenses during the educational or training experience.  Departments must assess the purpose of the payment to determine how it will be treated (i.e. for academic pursuit of the individual or compensation for services rendered).

Research Scholarships/ Fellowships

Scholarships/Fellowships given to students, generally in a term of non-enrollment (example: summer), for the pursuit of their studies and research.

Awards

Awards are given to students in recognition of academic achievement.  (i.e. Higher GPA,).

Prizes

Prizes are given to students who have submitted entries to a judged competition, for example, the best architectural design, best short story, or music or poster competitions.

Reimbursements

Students who incur costs for approved activities that primarily benefit the College may be entitled to reimbursement.  Reimbursements will be always be processed by the Accounts Payable Office. See College Procurement Reimbursement Policy.  

Honorarium

A payment in recognition of an individual’s services for which fees are not legally or traditionally required for an academic related event. Typically this includes guest speakers and other creative academic related activities. Students do not receive honoraria at William & Mary.

Examples:

Non-Qualified Scholarships

A US Citizen that is a WM Student receives a recruitment scholarship. This scholarship is given to a student that has demonstrated academic excellence.  The student receives this money during their fall semester. This is considered a Non-Qualified Scholarship payable through the Financial Aid Office and reported if applicable on a 1098-T.

Graduate Assistantship

A US Citizen that is a WM Student is accepted into a College graduate program that will require several years of study.  The student will receive an annual payment of $24,000.  The student will be required to perform services as a Graduate Assistant (GA) in exchange for payment.  This is a Graduate Assistantship to be processed as a semi-monthly payment to the student through the HR Office.  This assistantship will be reported on the form W-2 by the Payroll Office.

Undergraduate Employment

A Non-Resident Alien that is a WM Student performs editing services for a faculty.  The services agreement does not make this student an independent contractor.  The student must be paid using the student employment process; student employment form, one-time event payment.  The payment will be processed by Payroll. 

Stipend

A business that is not related to the College hires a WM Student that is a US Citizen for a summer internship with the business in Washington DC.  The student performs services for the business and the business pays the student fair market value wages and reports the wages on a W-2. In addition, the College has awarded a specific amount of money to the student to help defray costs associated with the internship. The student will not perform any services for the College.  This is considered a true Stipend under our definition.  Since the student is working in DC, the student is not enrolled in classes at WM for the summer semester.  The stipend payment must be processed through the AP Office.  Although the payments may be taxable to the student, no reporting is required to the student or IRS by the College.  The department must provide the Tax Letter to the student.

Research Scholarship

A US Citizen who is a WM Student participates in a two-month summer Research Experience for Undergraduates (REU) during a period of non-enrollment. No services are performed. The student receives $2,000 payment to be used by the student to offset the cost associated with the research and participation in this academic or training program. This is considered a Research Scholarship.  Although the payments may be taxable to the student, no reporting is required to the student or IRS by the College.  The department must provide the Tax Letter to the student.

Awards

A US Citizen who is a WM student receives an academic achievement Award at commencement.  He was selected as the student with the highest GPA in their program.  The department wants the student to receive his award on or about commencement.  Since the student is enrolled in classes during the semester the award is given, the department will process this payment through Financial Aid.  The payment if applicable will be reported on a 1098-T.

Prizes

A US Citizen who is a WM student wins a prize for his writing of a short story.  This is considered a Prize. All prizes payments are processed through the AP office and are reportable on a 1099-MISC.

Student Payment Guide Q & A