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 and 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 and 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 should generally be 181100, and the program code should generally roll up to NACUBO function 1787. All scholarships and educational assistance grants will be 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 is outlined in the document found at the following website (specifically, page 2-122, section entitled "Coordinating Official"): http://www.ifap.ed.gov/fsahandbook/attachments/0910FSAHbkVol2Ch10Administrative.pdf
For additional references regarding taxability of scholarships and grants, see IRS publication 970: http://www.irs.gov/pub/irs-pdf/p970.pdf
How to process: Scholarships and educational assistance grants are processed either by OSFA or University Student Financial Services and Cashier Operations (USFSCO). In either case, these payments will ultimately be disbursed through the student's University account. These payments will be considered a resource when determining a student's financial aid eligibility. Therefore, they may have an impact on the type and amount of financial aid the student is eligible to receive. OSFA will make the necessary adjustments to the student's financial aid prior to disbursement of the scholarship or grant. These adjustments may preclude the scholarship or grant from being refunded to the student. Students are encouraged to view their E-award, which is their electronic financial 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
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Process scholarship and grant payments for less than ten (10) recipients on a Student Account Payment Request Form (Web Form)
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Process scholarship and grant payments for ten (10) or more recipients through the Office of Student Financial Aid. UIUC payments are processed through the DAWS system. UIC and UIS departments requesting payments for new scholarships or grants tied to a C-FOAP that will remain the same each year may request a new detail code through the respective campus Financial Aid contact below.
Foreign National Students
For payments of scholarships or grants to foreign nationals, please see the OBFS Policy Manual, document entitled "Procedures to Pay Scholarships to Non-Resident Alien Students": http://apps.obfs.uillinois.edu/news/dsp_News.cfm?FY=2008&A=49724ba0-ba91-426a-ae5e-254ceff57272
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.
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.
Prizes and awards are generally processed through University Payables, typically via a direct payment to the student, and are not related to employment services. However, 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 may receive. If required, the University will report the prize or award to the IRS and the student on IRS Form 1099-MISC, Miscellaneous Income. The Banner account code used on prizes and awards should generally be 181700, and the program code should generally roll up to NACUBO function 1789.
The University’s reporting responsibility is outlined in the document found at the following website (specifically, page 2-122, section entitled "Coordinating Official"): http://www.ifap.ed.gov/fsahandbook/attachments/0910FSAHbkVol2Ch10Administrative.pdf
How to process:
U.S. Citizens
Process these payments on an Invoice Voucher (MS Excel) through University Payables. Include a complete description of the prize/award on the voucher, 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 see the OBFS Policy Manual, document entitled "Procedures to Pay Scholarships to Non-Resident Alien Students": http://apps.obfs.uillinois.edu/news/dsp_News.cfm?FY=2008&A=49724ba0-ba91-426a-ae5e-254ceff57272
For additional references regarding taxability of prizes and awards, see IRS publication 515, page 22: http://www.irs.gov/pub/irs-pdf/p515.pdf
Fellowships/Trainees
Payments in this category aid in the pursuit of an individual's study or research. No past, present, or future services are expected in return for the support. The funds may be considered taxable income to the recipient, but are not reported as taxable income by the University on Forms W-2 or 1099-MISC. However, depending on the circumstances of the payment, payment may be reported on IRS Form 1098-T, Tuition Statement.
How to process:
U.S. Citizens
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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.
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UIS Graduate Fellowships - process through the Graduate Studies Office. The payments will be issued through University Payroll.
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UIUC Graduate Fellowships - process through the Graduate Fellowship Office. The payments will be issued through University Payroll.
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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
Process payment requests to University Payables on the Travel/Employee Expense Reimbursement Form. Units must indicate on the form that the expenditure for the activity primarily benefits the University. In addition, units must state the University's bona fide business purpose.
Examples (assume U.S. Citizens):
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Student A is asked to travel to New York City to represent the University of Illinois in a Scholastic Bowl competition.
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Student B is asked to travel to a conference held in San Francisco to present a paper on behalf of the Psychology Department.
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Student C is asked to purchase a toner cartridge for a University owned printer that is located in his department's lab.
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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
For foreign national students, submit reimbursement requests to University Payroll on the Foreign National Payment Form. Attach original receipts to the form. Units must indicate on the form that the expenditure offer the activity primarily benefits the University. In addition, units must state the University's bona fide business purpose.
Registered Student Organizations
Students may receive payment(s) from a Registered Student Organization (RSO) for a variety of reasons. These payments are processed by University Payables on behalf of the RSO. The payments may be taxable income to the student; however, Form 1099- MISC reporting is the responsibility of the RSO, not the University.
How to Process:
Students should submit requests for payments from an RSO fund to University Accounting and Financial Reporting (UAFR) for approval. UAFR will forward the requests (vouchers) to University Payables for check processing.
Examples:
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Student A is to be paid $300 for deejay services provided during an international student event sponsored by an RSO.
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Student B is to receive $150 as reimbursement for food and supplies purchased for "Quad Day" celebration on behalf of an RSO.
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Student C is to receive travel reimbursement for expenses incurred as a representative of the University at a national conference for his RSO.
Contact
If you have questions about a particular type of payment, please contact the appropriate office:
| University Payables |
Sandra Ehler, 217-333-0780, sehler@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) |
Tina Owens, 217-333-8283, aroperations@uillinois.edu |
| UI Foundation Gift Administration |
217-333-0909 or giftadministration@uif.uillinois.edu |
| University Tax |
217-244-8359 |
Last Updated: September 30, 2011