Financial Aid: Processing Payments to Undergraduates

Payments (also called stipends in this policy) to undergraduate students are made through the financial aid office unless the payments are related to providing services as an employee or are to reimburse non-educational expenses, such as travel. This policy defines and clarifies terms and payment processes. Information that may relate to graduate students is for clarification only.

Because the word stipend is used so often and can have so many different meanings it will be defined as follows for this policy-a payment or payments made to a student because they were selected:

• For an award based on academic merit;
• For an award based on financial need;
• For an award based on talent such as music, athletic ability, or the like;
• For an award based on any combination of academic and/or financial need and/or talent;
• To provide service to the University as an employee.

Definitions

This policy defines and clarifies the following terms:

• Assistantship - A stipend paid monthly to a student for teaching or for performing research. Students receiving an assistantship frequently receive a fee waiver.
• Educational Expenses - As defined by the Department of Education under Title IV, educational expenses include tuition, fees, room, board, books and supplies, personal expenses, transportation, etc. These expenses are referred to as cost of attendance (COA) items.
• Fee Waiver - A stipend for educational fees, most commonly in exchange for the student serving as a Graduate Research or Teaching Assistant (GRA or GTA).
• Fellowship - A stipend paid to a graduate student based on academic excellence. Students receiving a fellowship frequently receive a fee waiver.
• Financial Aid - A stipend in the form of fee waivers, fellowships, grants, loans, prizes/awards (academic), scholarship, need-based employment and all similar types of assistance are considered financial aid for purposes of this policy because the Department of Education regulations require that they be considered when determining need for federal student aid.
• Grant - A stipend based on need.
• Prize/Award (academic) - A stipend given in recognition of special skills, special achievements, special knowledge, special renown, or because that individual won a contest.
• Scholarship - A stipend based on academic excellence.
• Service Obligated - Performing employment-type or employment-related activities for the University. The payment is treated as compensation and processed through the Payroll Office.
• Student - An individual enrolled or projected to be enrolled in one or more credit hours at the University of Missouri-Columbia during a semester, including an individual enrolled in a class through CDIS (Center for Distance and Independent Study) and MU Direct. Non-degree students are not considered MU students for purposes of this policy.
  NOTE: This definition may not apply for other purposes.

The definition of a payment must look to the substance of the transaction, not what the payment may be labeled. For example, the Jane Smith Award and the Peter Jones Prize may actually be a student employment opportunity and a scholarship, respectively. There is often confusion about the exact nature of a payment because the terms used are not based on a precise description and understanding of the payment. Payments/stipends should be processed as described below.

Processing Office

Payments to undergraduate students are processed according to this schedule:

Student Accounts Receivable System

Financial aid payments flow through the student accounts receivable system (CSAR), where they are applied to any balance a student owes the University from educational fees, incidental fees, housing and other costs incurred on their accounts, such as from the Bookstore, Parking, etc. Any amounts over and above what the student owes may result in a payment of the excess to the student. The payments are by check unless the student requests direct deposit.

Timing of Payments

Each semester, the earliest that financial aid payments are made into the CSAR system is 10 days before the first day of class. Departments have the option to schedule financial aid payments once a semester or monthly. Contact the student financial aid office.

Taxes

Payments for services are considered compensation, subject to appropriate deductions and taxes, and reported on IRS form W-2. Other payments of financial aid are not reported on IRS form 1099, but it is the taxpayer's responsibility to determine what portion of financial aid is taxable and properly report it on their income tax return. As required by the Taxpayer Relief Act of 1997, financial aid and qualified educational expenses are reported to the student on IRS form 1098-T for calculation of the Hope and Lifetime Tax Credits.

Peoplesoft Accounts

Paying financial aid when services are provided uses the applicable Salary and Wage PeopleSoft Account. Paying financial aid when no services are provided uses these PeopleSoft Accounts:

• 760100 - 760200 Undergraduate Resident & Non-Resident
• 760300 - 760400 Graduate Resident & Non-Resident
• 760500 - 760600 Professional Resident & Non-Resident