Statement of Policies

Student Stipend Policy

This Policy Statement outlines the standard practice for stipend payments to undergraduate students from any unit in the University. Pay for services rendered which primarily benefit a faculty member, Stanford University or its programs, or as compensation for employment, must be paid through hourly pay, which is not covered by this policy.

Stanford has a long-standing commitment to provide need-based financial support to undergraduates which has resulted in a generous financial aid program that provides scholarship and grant funding to students who demonstrate need. Athletic scholarships, which are awarded by the Athletics Department in compliance with NCAA regulations, are the only merit-based scholarships offered by the University.

To comply with US Department of Education and NCAA regulations, student payments, awards, prizes, and gifts that are made available to the student because they are a Stanford student, must be reported to the Financial Aid Office to be coordinated with their financial aid award. The Financial Aid Office is responsible for the disbursement of stipend funds to undergraduates; see the steps for faculty and staff to make requests.

Definitions

Stipend

As defined in Admin Guide 10.1.1 Undergraduate Student Employment, a stipend is a payment to an enrolled or continuing student to support personal scholarly activities such as an undergraduate research project or experiential learning opportunities such as an unpaid internship. The payment should help the student defray research costs or living and travel expenses to enable participation in the scholarly activities or experiential learning opportunities. Stipends are not used to pay for services rendered which primarily benefit the faculty member, Stanford University or its programs, or as compensation for employment (which should be paid through hourly pay). A stipend, which includes all forms of monetary payments including gift cards, is considered a form of financial aid. As such, when a student receives a stipend during a period of enrollment when they are also receiving financial aid and/or athletic aid, their aid may be adjusted to accommodate the stipend. When contemplating a monetary payment, like a gift card, to students, please consider that there may be a disparate impact depending upon each student’s level of financial aid support.

Awards and Graduation Honors

Stanford students may receive university awards for their academic, research, and writing excellence. See Awards and Graduation Honors for examples of awards administered by VPUE. When cash prizes are awarded, including gift cards, and a condition of the award is student status, the award may impact financial aid and/or athletic aid eligibility in the current or following enrollment period. If the award is considered a prize for a contest open to students and non-students alike, the award is not directly factored into financial aid eligibility. 

End of year awards and graduation prizes do not affect the student’s financial aid eligibility for the current year when awards are made after graduation. However, if the student re-enrolls in the following term or academic year, the awards or prizes would be considered a resource available to help with educational expenses and affect financial aid eligibility.

How Stipends are Coordinated with Other Forms of Financial Aid

Stipends, prizes or awards to students are a form of financial assistance and may require either an adjustment to the financial aid awarded and/or an adjustment to the student’s overall cost of attendance when the student is also receiving need-based or athletic aid.

The Financial Aid Office has the responsibility to determine whether adjustments are necessary. When the student is receiving federal or state financial aid, and/or institutional need-based aid or athletic scholarship, all other resources must be evaluated to ensure that:

  • The resource is not considered to be a countable resource by financial aid regulations; and/or
  • The resource fits within the established budget for the student and when need-based aid is involved also within the level of need (i.e. the student is not overawarded); and/or
  • The resource is designated for educational costs not already included in the budget and these costs are documented. A financial aid administrator may then allow the cost of attendance to be increased to allow the additional resources.

Resources that must be counted for financial aid purposes include, but are not limited to:

  • Scholarships, including athletic scholarships and scholarships from external sources,
  • Need-based federal and state grant awards, including Pell Grants and Cal Grants,
  • Fellowships and tuition support from assistantships (which may be awarded to coterminal students still receiving undergraduate aid),
  • Long-term educational loans, including federal Direct loans, PLUS or Grad PLUS, private, or state sponsored educational loans,
  • Stipends paid for student residence roles,
  • Stipends paid for support of personal scholarly activities such as an undergraduate research project or experiential learning opportunities including an unpaid internship,
  • Need-based Federal Work-Study earnings,
  • Cash awards and prizes awarded to students only. Awards and prizes for competitions open to students and non-students alike are not considered countable resources. Any other cash prize awarded because the recipient is a student (e.g., for competitions open only to students) is considered a resource.
    • Prizes awarded to graduating seniors are generally considered to be a resource in the next term only if the student re-enrolls. Cash prizes for undergraduates who are not graduating are discouraged and must be counted as a resource for the following term.

Earnings from work that are not based on financial need are specifically excluded from consideration as resources. 

Non-cash prizes are not generally counted, except when they are in place of items in the standard cost of attendance (e.g., waiver of housing charges).

Need-Based Scholarship recipients are expected to contribute toward their educational costs through work during the summer and during the academic year. This is referred to as Student Responsibility. There is a standard minimum expectation of $5,000 per year for most students. Many students use outside scholarships to meet their Student Responsibility. Students are informed of their individual student responsibility expectation on their Financial Aid Notification (which is always available to them in Axess.) One way students can combine stipend support with their need-based aid is to use their stipends to meet their Student Responsibility. If, however, their Student Responsibility has already been met through gift aid and/or earning through the Federal Work-Study program, any additional stipend the student receives would reduce their eligibility for need-based scholarship.

Reimbursement for Non-Standard Costs
Stipends are sometimes used to reimburse students for educational costs that are not included in the standard cost of attendance. One example is for expenses related to conducting their own research projects. If the Financial Aid Office is provided with documentation of those expenses, it can increase the student’s overall cost of attendance to reflect the higher costs and process the stipend without impacting the other aid the student is receiving. The required documentation must include:

  • the amount of the resource and the costs that the resource is meant to cover,
  • the educational purpose of the activity, program, materials, travel, or other expense for which the funds are given,
  • and the academic period(s) for which the funds are given.

Stipends intended to support students during a period of non-enrollment, for example during summer quarter when the student is not enrolled and not receiving financial aid, do not have to be coordinated with their financial aid received during the academic year.

Stanford students may have occasion to travel in support of their course of study or research. A department may wish to provide funding for such travel. Rather than reimbursement through a stipend, which may be taxable income to the student, use the travel expense reimbursement process when possible.

Tax Considerations

Scholarship, fellowship and grants to students enrolled in degree programs may be subject to tax. Amounts that are used for tuition and other fees required for enrollment, such as books, supplies, and equipment required for courses, are tax free to the recipient. All other awards, such as those applied to room and board or stipends for incidental expenses, are potentially taxable for the recipient. See additional details at IRS.gov or the Stanford Student Services Tax Essentials & Resources website.

Taxable scholarship, fellowship and grants awarded to non-residents of the U.S. are subject to 14% federal tax withholding and are reported to the recipient annually on Form 1042-S. Taxable amounts awarded to U.S. citizens and residents are not reported to the recipient on a tax form but must be self-reported on their tax return. Recipients are advised to consult a tax advisor or the resources above. Note that for international undergraduate need-based aid recipients the financial aid program covers the cost of the 14% tax withholding for their financial aid funds. For all others, tax withholding charges will be added to their student account at the time funds are disbursed.

Frequently Asked Questions

Pay for services rendered which primarily benefit a faculty member must be paid through hourly student employment; a stipend may not be issued.

Stanford recognizes the unique contributions of Residential Student Leaders through academic appointments (not “employment”). As such, the stipends that those student leaders receive are considered to be resources for purposes of federal student aid and may impact eligibility for federal aid programs (student loans and federal work-study), but do not impact eligibility for institutional scholarship funds. All other stipends do have the possibility of impacting institutional scholarship funds, depending on the individual student situation.

Consider recognizing volunteers with gifts other than cash (e.g., Stanford branded merchandise, tshirts, etc.). Students must be compensated for “work” through hourly pay, even if it is short term in nature.

Students may not volunteer to complete work that should be compensated through hourly student employment.

To quote from Admin Guide 10.1.1, “Students are encouraged to limit their hours of work so that they may devote sufficient attention to their studies. Therefore, the jobs listed for undergraduates during any enrollment period should not typically require more than 15 hours per week of work. During break periods between quarters, undergraduates may be employed full time.” Fifteen hours per week is a suggestion, not a hard and fast rule. Student workers must be provided with applicable rest and meal periods, and receive overtime pay for shifts in excess of 8 hours in a workday or 40 hours in a workweek. Each student should be free to accept the amount of work they can handle, keeping in mind that academics must come first. The financial aid program generally does not expect students to work more than 6-8 hours per week if they are working consistently throughout the year.

One-time musical performances may be compensated through Business Expense.

Programs are encouraged to consider giving a meaningful tangible gift to recognize academic accomplishments in lieu of a cash award or gift cards.

Students always have access to their current Financial Aid Notification in Axess. The amount of their expected Student Responsibility is listed at the bottom of the first page. Staff who are concerned about individual student eligibility are welcome to ask the student or contact the FAO for the information with the student’s written permission at UG-stipends@lists.stanford.edu.
Updated on January 15, 2025 9:39 AM