The following guidance is to be used by departments in assisting them in choosing the most appropriate payment method when paying a current North Dakota State University student.
When budgeting and administrating grants, contracts and other sources of funding, it is important that departments understand the difference between the various types of awards and payments to students.
Regulations for each type of award must be met. It is also important the department, and the students they are paying, are aware of how the payments will be received and the impact these payments may have on the student’s financial aid package.
To determine if the payment to the student is considered employment compensation for services rendered, ask yourself the following questions. If you answer ‘yes’ to any, the payment will be considered employment related compensation and will need to be processed through the NDSU Payroll Office.
- Does the amount represent payment for past or present employment services?
- Is the student paid a wage for the service provided?
- Does an employee/employer relationship exist?
1. Anyone who performs services for you is your employee if you can control what will be done and how it will be done, even if you give the individual freedom of action.
- The work to be performed is part of the regular business activity of the University, including planned schedules and breaks.
2. The student is subject to discipline under University personnel policies, and may be discharged at the University’s discretion, and payments will only be made for services already rendered.
The payment to the student will be considered wages and reported on the student’s W-2. Any wages reported to the student on a W-2 is reported as income on the student’s Financial Aid application (FAFSA) for the next academic year. These wages may impact the financial aid awarded in the next academic year. Please visit with the Student Financial Services/Financial Aid Offices for more information.
The payment to the student will be considered an Educationally Related Award if the purpose is to support the student’s pursuit of an educational program, and will need to be processed through the NDSU Financial Aid Office. The financial aid is then applied to the Student’s account. Excess aid (aid exceeding student charges) refund payments are issued by the Customer Account Services Office.
- Payments to assist students with financing their education may cover tuition, fees, books, supplies and expenses during enrollment.
- Payments that are educationally related personally benefit the student.
- Most payments to students, not considered employment compensation for services rendered, fall into this category, as the reason they are receiving the award is related to their pursuit of an educational program.
- The term ‘student’ for purposes of educationally related awards, means the individual is currently enrolled at NDSU.
Regardless of the type of educational expenses the award covers or how or when the disbursement is made, these payments will still be classified as Educationally Related Awards.
If there is uncertainty as to whether a payment to a student is educationally related or whether the payment would have an effect on the student’s financial aid, please contact the Student Financial Services/Financial Aid Office.
If a department would like to issue a new scholarship please review the Guidelines for Prizes, Promotional Items and Travel Related and Educational Required Expenses . These guidelines were created by the Student Financial Services Office to provide direction to departments who wish to offer gifts as incentives for attending events and/or competing in contests and when these may or may not be considered a scholarship.
There are some exceptions where an educationally related award will be paid on an Accounts Payable Voucher, these are very limited and currently only includes the McNair Scholarship and NSF Fellowship payments.
The payment to the student will be considered a reimbursement when the expenses incurred were on behalf of the University and when there is a direct connection between the expense and the business purpose. These payments should be processed through the Accounting Office on an Accounts Payable Voucher.
- These payment types are not reportable to the IRS by the University as income to the student, provided the appropriate documentation is submitted.
- Expenses incurred by a student were necessary to further a department member’s research project or otherwise to fulfill the University’s obligations under a grant or contract.
- Expenses to attend a conference or event at which the student is officially representing NDSU at the request of a department. May include conference/registration fees, and travel and lodging fees.
Reimbursement payments made to a student, where the expenses were incurred on behalf of NDSU, can be paid out of local and appropriated funds.
In rare circumstances, a payment may be made to an NDSU student that does not fall into the previous three categories. If this occurs, you should contact the Accounting Office first, before initiating a payment to the student.
Following is a link to a flowchart designed to aid the department in determining the most appropriate method of payment to students. The flowchart is not all inclusive and in some cases determination of payments may need a more thorough review.
The flowchart does not apply to:
- Students who are not currently enrolled at NDSU.
- Prizes and awards, given to students as a promotional item or for research participation. Please refer to the following: Guidelines for Prizes, Promotional Items and Travel Related and Educational Required Expenses for more information.