Non-Compensatory Stipend Payments to WVU Students

Non-compensatory stipend payments are made without the requirement for specific services to be rendered by the individual. Any activity performed by the student is to satisfy degree and/or course requirements and the payments to the student are made to aid the student in their educational pursuits. It is important to note that the performance of any activity by the student should be performed independently and not under any direct supervision or direction. The beneficiary of the activity should be the student as part of their enrollment including degree and/or course requirements and should aid in their education with any benefit to the University being incidental. The student may seek advice or assistance from colleagues or may collaborate with others in their discipline, but the final decisions regarding their research, project, or educational pursuit should be decided by the student.

As an example, if the student is conducting a research project as part of their educational program, which satisfies educational requirements and/or other personal educational benefits, then the payment can be considered a non-compensatory stipend payment. In contrast, if the student is working in a defined employment position (GRA, GA, RA, etc.) and is under the direct supervision of a University employee and the University is the owner and/or beneficiary of research findings, then payments to the student would be considered compensatory and should be paid through the payroll system.

Because non-compensatory stipend payments are not considered employment wages, the payments are not subject to the University fringe rate and the individual would not be covered for benefits under either Workers’ Compensation or Unemployment Compensation.

Payments made to WVU students of non-compensatory stipends that are awarded to support the student’s study, training, or research, including cost of living expenses, are considered gift aid under federal Cost of Attendance regulations. As defined by federal regulations, gift aid payments include Title IV aid, stipends, scholarships, state aid, for-credit internships, non-credit internships, research support payments, summer research and other summer projects, participant payments (non-human subject), and other miscellaneous payments paid to the student because of their enrollment at a higher education institution.

As gift aid, non-compensatory stipend payments made to WVU students should be paid through the student’s Banner account and will be applied to any outstanding balance prior to the student receiving any funds. Also, these payments will count as Estimated Financial Assistance (“EFA”) and may impact other types of aid. Non-compensatory stipend payments that are subject to grant or donor restrictions that do not permit reductions in payments for an outstanding balance due on the student’s account should be amended, if possible, with the granting agency or donor to allow such reductions. If unable to resolve and/or amend the terms, departments should work with Student Financial Services to determine if the payment can be made in full to the student without reduction for any outstanding balance on the student’s Banner account. In the event the payments cannot be made as required by the grant due to regulations, departments should be given an opportunity to replace funding or remove entirely.

For students who are eligible for federal and state aid, to ensure non-compensatory stipend payments are properly accounted for as part of the student’s total financial aid package, and do not exceed the University’s established Cost of Attendance, the total payment amount should be determined prior to the beginning of the academic term with the total payment made at that time. Federal and state regulations limit when payments can be made to students through the student’s Banner account. Payments cannot be posted earlier than 10 days prior to the student’s first date of enrollment for the academic term or payment period. Even though non-compensatory stipends may or may not be federal or state aid, policy dictates that all payments processed through the student’s Banner account follow the same procedure. Therefore, they will not be posted more than 10 days prior to the student’s enrollment at the beginning of the academic term.

Because non-compensatory stipend payments are considered gift aid and not contingent upon services being performed, payments should not be recurring in nature on a bi-weekly, monthly, or other repetitive basis. Payments made on a recurring basis or are contingent upon the individual performing specific tasks or reaching specific goals or milestones to “earn” the right to the payment are not considered gift aid but are employment wages and should be paid through the payroll system process.

Payments for non-compensatory stipends to enrolled WVU students must not be made through Procurement, Contracting & Payment Services (PCPS) nor through any other payment method, including the WVU Foundation, and should only be paid through the student’s Banner account. The exception is for WVU students receiving non-compensatory stipend payments during an academic term of non-enrollment. Payments that fall under the exception can be paid through PCPS; however, departments must notify Student Financial Services of such payments because non-compensatory stipend payments made during periods of non-enrollment must be applied to the student’s account during the subsequent period of enrollment and counted as EFA.

All gift aid, including non-compensatory stipend payments, processed through the student’s Banner account and/or provided by the University is reported on the student’s Form 1098-T in Box 5. Gift aid is a potentially taxable income to the student dependent upon their individual tax situation and their related qualified educational expenses as defined by the IRS. Form 1098-T is issued at the end of each calendar year but note that a Form 1098-T is not required to be issued by the University to all students. Non-issuance of a Form 1098-T to an individual student does not mean the gift aid is non-taxable to the student taxpayer, only that under IRS guidelines the University is not required to issue a form. Form 1098-T reporting all gift aid is issued by the University when required under IRS guidelines. It is the individual student’s responsibility to report on their personal tax return all taxable non-compensatory stipend payments received.

While every effort is made to maximize a student’s funding opportunities, departments should be cognizant that all forms of aid including scholarships, stipends, and other forms of payment must be considered in the student's overall financial aid offer and that non-compensatory stipends could result in a reduction of other gift aid available due to federal and state regulations. Regulations pertaining to Title IV aid restrict the total amount of gift aid from all sources a student receives, and any departmental aid or stipend may reduce the student’s eligibility for other forms of federal and/or state aid. It is important to note that each student’s financial aid offer is unique, and any questions related to awarding aid should be directed to Student Financial Services with the understanding that staff are restricted from discussing specific student aid information without written consent from the student.

Non-compensatory stipend payments and all gift aid provided to foreign national students is potentially subject to Alien Tax (ATAX) for those individuals who are considered a non- resident alien for income tax purposes. Foreign national students subject to ATAX will receive a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, at the end of each calendar year reporting their income subject to ATAX taxation and the ATAX withheld. Foreign national students who are unsure of their tax status should be referred to Tax Services for a tax analysis.