Payments to Vendors and Students

Payments to University of Illinois Students

The definitions of Scholarships, Grants, Prizes and Awards provided below supersede all prior definitions. The wording used in fund agreements has changed over time, so each fund agreement must be interpreted based on the definitions below, not on the choice of words used in the fund agreement. The University of Illinois Foundation has final authority in determining how these agreements are interpreted.

For additional information, see also General Guidelines for Processing Payments to Students in flowchart format.

Scholarships and Educational Assistance Grants

Scholarships or grants that provide student educational assistance are generally amounts paid to, or for the benefit of, students at an educational institution to aid in the pursuit of their studies or related research. Recipients may be undergraduate, graduate or professional program students. These payments typically support educational needs, such as, tuition, fees, room, board, supplies, and travel primarily for the benefit of the student's academic development.

Scholarships and educational assistance grants for qualified expenses (for example, tuition, required fees, books, or supplies) are not taxable income to the recipient. However, scholarships or educational assistance grants for unqualified expenses (for example, room, board, travel, research, or fees/books/supplies not required) are taxable income to the recipient. Scholarships include financial aid, undergraduate trainee stipends, tuition and fee waivers, and travel awards, all of which are used to aid students in the pursuit of their studies (i.e., these payments are typically used by the students to offset educational expenses such as tuition, fees, room, board, books, supplies, etc.). Recipients of scholarships are not expected to render services to the institution as a consideration for their scholarship, nor are they expected to repay their scholarships. If the source of the scholarship is gift funds, the donor of the scholarship may set the criteria for recipient selection, but may not select the recipient.

All scholarships and educational assistance grants must be reported to the campus Office of Student Financial Aid (OSFA) for processing and to be included in the student’s financial aid package. The receipt of scholarships and grants may reduce other financial aid the student receives. The Banner account code used on scholarships and educational assistance grants is generally 181100, and the program code should generally roll up to NACUBO function 1787. Generally, scholarships and educational assistance grants are reported by the University to the Internal Revenue Service (IRS) and to the student on IRS Form 1098-T, Tuition Statement.

The University’s reporting responsibility with respect to Federal Student Aid (FSA) and any other financial assistance received by students is outlined in the document found at the following website (specifically, page 2-33, section entitled "Coordinating Official"): FSA Administrative & Related Requirements (Chapter 3) Link opens PDF file.

For additional references regarding taxability of scholarships and grants, see IRS Publication 970 Tax Benefits for Education Link opens PDF file.

How to process: Scholarships and educational assistance grants are processed either by the Office of Student Financial Aid (OSFA) or University Student Financial Services and Cashier Operations (USFSCO). Students must be registered for the term that the funds are being provided as these payments cannot be applied to a term for which the student is not enrolled in at least one course. These payments are disbursed through the student's University account and are considered a resource when determining a student's financial aid eligibility. Therefore, the payments may have an impact on the type and amount of financial aid the student is eligible to receive. Any scholarship and educational assistance grant awards that are made for a term when the student is not registered will be processed for the previous term of the student’s enrollment and aid for that term will be adjusted accordingly. OSFA will make the necessary adjustments to the student's financial aid prior to disbursement of the scholarship or grant. These adjustments, as well as any current balance due to the University, may preclude the scholarship or grant from being refunded to the student. Students are encouraged to view their Financial Aid Award letter and their billing statement periodically throughout the semester.

Specific processing instructions for all scholarships or grants, including travel scholarships and grants, are as follows:

U.S. Citizens 

  • UIC and UIS:
    • Process non-recurring scholarship and grant payments (i.e. payments to less than 10 students that are tied to a C-FOAP that is valid for only one academic year) on a Student Account Payment Request Form Link opens new window (Web Form).
    • Process non-recurring payments to 10 or more students through the Office of Student Financial Aid.
    • Process recurring scholarship and grant payments (i.e. payments tied to a C-FOAP that will remain the same year after year) through the Office of Student Financial Aid.
  • UIUC:

Foreign National Students
For payments of scholarships or educational assistance grants to foreign nationals, please visit Scholarship and Fellowship Payments.

Prizes and Awards

Prizes and awards are amounts received primarily in recognition of charitable, scientific, educational, artistic, literary, or civic achievement, or are received as the result of entering a contest. Recipients are selected based on their actions to enter a contest, competition or proceeding.

Though not related to employment services, a prize or award is generally taxable income to the recipient regardless of the funding source. Typically, unless otherwise stated in the prize or award documentation, no restrictions are placed on how the student can use the award money; it is not limited strictly to educational expenses.

If restrictions are imposed, such as for travel or room and board, then it is no longer considered a prize or award (see the definition for scholarships.) If the source of the prize or award is gift funds, the donor of the prize or award may set the criteria for recipient selection, but may not select the recipient.


All prizes and awards must be reported to Financial Aid to be included in the student’s financial aid package and may reduce other financial aid the student receives. If required, the University will report the prize or award to the IRS and the student on IRS Form 1099-MISC Link opens PDF file, Miscellaneous Income. The Banner account code used on prizes and awards is generally 181700, and the program code should generally roll up to NACUBO function 1789.

The University’s reporting responsibility with respect to Federal Student Aid (FSA) and any other financial assistance received by students is outlined in the document found at the following website (specifically, page 2-33, section entitled "Coordinating Official"): FSA Administrative & Related Requirements (Chapter 3) Link opens PDF file.

How to process:

U.S. Citizens

  • UIC and UIS: Submit these payments to University Payables via the TEM system. Include a complete description of the prize/award, the term of payment, and a statement indicating there are no restrictions on the use of the funds. Use Account code 181700 for these payments.
  • UIUC:
    • Process all payments for the current academic year through the DAWS system. Information on how to access the DAWS application is available at http://osfa.illinois.edu/aid/scholarships/DAWS.html Link opens new window
    • Submit all payments for award periods prior to August 5, 2013 to University Payables via the TEM system. Include a complete description of the prize/award, the term of payment, and a statement indicating there are no restrictions on the use of the funds. Use Account code 181700 for these payments.

Foreign National Students
For payments of prizes and awards to foreign nationals, please visit Award, Prize and Human Subject Payments.

Fellowships/Traineeships

A fellowship, as defined in Internal Revenue Service (IRS) Publication 970: Tax Benefits for Education Link opens PDF file, is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. No past, present or future services are expected in return for the support, and they are typically used to aid graduate (not undergraduate) students.

According to the IRS, universities are not responsible for withholding or reporting income taxes for tax purposes on fellowship payments for: (1) U.S. citizens, (2) permanent residents, and (3) foreign national resident aliens (note that permanent residents and foreign national resident aliens are treated as U.S. citizens for tax purposes). Thus, fellows do not receive a Form W-2 or 1099-MISC on their fellowship income as the University does not report the fellowship payment as taxable income to either the state or the federal government. However, the University is required to report fellowships to the IRS for informational purposes only on Form 1098-T, Tuition Statement. The taxability of any fellowship payment is a matter strictly between the fellow and the IRS. Therefore, no income taxes are withheld by the University from fellowship payments. For more information, refer to IRS Publication 970: Tax Benefits for Education Link opens PDF file, or the applicable link below, depending on your applicable campus:

How to process:

U.S. Citizens

  • UIC Graduate Fellowships - if the fellowship is funded and/or administered by the UIC Graduate College, process through the Banner HR system. The payments will be issued through University Payroll.

  • UIS Graduate Fellowships - process through the Graduate Studies Office. The payments will be issued through University Payroll.

  • UIUC Graduate Fellowships - process through the Graduate Fellowship Office. The payments will be issued through University Payroll.

  • Fellowships that do not fall in the above categories should be processed in the same manner defined for scholarships and grants.

Foreign National Students

Stipends/Allowances/Assistantships

The terms stipends, allowances, and assistantships, are not defined in the Internal Revenue Code. Departments are asked to review the purpose of the payment and determine whether the payment will be processed as (1) a scholarship or fellowship through their campus Office of Student Financial Aid or through USFSCO, or (2) compensation for services, through University Payroll.

Student Reimbursements

Student reimbursements for expenditures incurred for activities that primarily benefit the University (expenditures that are for bona fide University business purposes) are not considered reportable as taxable income to the IRS.

An example is a reimbursement of travel expenses to a student who travels to a conference to represent the University as requested by the University and approved in advance. Generally, such expenses must be fully reimbursed by the University. To avoid reimbursement processing delays, if the University is the primary beneficiary of the expenditures incurred, but does not pay 100% of the expenditures, the unit must provide documentation that indicates the University is the primary beneficiary.

All University policies and procedures apply to these reimbursements, including the requirement that reimbursement requests be received by University Payables within 60 days of the date the expenditure was incurred, to avoid being reported to the IRS as taxable income to the student.

How to process:

U.S. Citizens

Submit payment requests to University Payables through the TEM system. Units must indicate that the expenditure for the activity primarily benefits the University and describe the business purpose for the University.

Examples (assume U.S. Citizens):

  • Student A is asked to travel to New York City to represent the University of Illinois in a Scholastic Bowl competition.

  • Student B is asked to travel to a conference held in San Francisco to present a paper on behalf of the Psychology Department.

  • Student C is asked to purchase a toner cartridge for a University owned printer that is located in his department's lab.

  • Student D travels to Germany to perform research for the University, which happens to be the same topic related to her dissertation. The University would perform research on this topic regardless of the student performing research for her dissertation. The University is the primary beneficiary of this travel.

Foreign National Students

Submit reimbursement requests for Foreign National students to University Payables through the TEM system. The payment request will route to University Payroll for approval. Units must indicate that the expenditure for the activity primarily benefits the University and describe the business purpose for the University.

Contact

If you have questions about a particular type of payment, please contact the appropriate office:

University Payables (for questions about Prizes and Awards, and Payments to Registered Student Organizations) Susie Baker, 217-333-6401, susbaker@uillinois.edu
University Payroll UIUC: 217-265-6363
UIC: 312-996-7200
UIS: 217-206-7211
payinq@uillinois.edu
UIC Student Financial Aid (for questions about scholarship and grant payments for 10 or more recipients) Deidre Rush, 312-996-5563, deidreb@uillinois.edu
UIS Student Financial Aid (for questions about scholarship and grant payments for 10 or more recipients) Gerard Joseph, 217-206-7697, gjose1@uis.edu
UIUC Student Financial Aid (for questions about scholarships and grants processed through DAWS) Michelle Trame, 217-333-7542, mtrame@illinois.edu
UIC Graduate College Amy Levant, 312-413-2560, Amy@uic.edu
UIS Graduate Studies Office 217-206-6544 or 217-206-7411
UIUC Graduate College Fellowship 217-333-0036 or gradfellowships@illinois.edu
University Student Financial Services and Cashier Operations (for questions about the Student Account Payment Request Form) Merci Alvarado, 312-355-5410, aroperations@uillinois.edu
UI Foundation Gift Administration 217-333-0909 or giftadministration@uif.uillinois.edu
University Tax 217-244-8359

Last Updated: March 5, 2014