1.3.4 Fellowship (Stipend) Payments

1.0  POLICY

The Fellowship payment is intended to assist in defraying a student's or trainee's cost of living expenses.   The payment is not service-related; therefore there is no employee/employer relationship. This form of payment is not to be used for wages or for when services of any kind are performed.  There are Internal Revenue Service (IRS) guidelines specifically related to fellowship payments.  For U.S. citizens, there is no tax withholding requirement for the university.  For Non-Resident Alien (NRA) fellowship recipients, the university has both reporting and withholding requirements and requires either a social security number or a tax identification number (ITIN).  Typically, fellowship stipend payments are taxable to citizens and NRAs and should be included as taxable income on the individual's annual tax returns.  NRAs may qualify for an income tax exemption related to a tax treaty between the fellow's country of tax citizenship and the United States.  Please contact the Payroll Office for further clarification (313-577-2138). All fellowship payments must be approved by the Business Manager of the unit requesting the payment.

2.0  SCOPE

Undergraduate and graduate students, as well as post-doctoral trainees, are eligible for fellowship stipend payments.  Employees, i.e. persons providing a service to the university, are not eligible.

3.0 DEFINITIONS/TERMS

A fellowship payment is an amount paid to a student or post-doctoral award recipient when there is no service-related requirement for payment.  The payment is to aid in the pursuit of study or research and is classified as an unrestricted scholarship.  This payment is considered taxable income to the recipient unless it meets the Internal Revenue Code (IRC) requirements for qualified expenses.  Please refer to IRS Publication 970 Tax Benefits for Education at http://www.irs.gov/ for further details.

4.0 PROCEDURE

If the recipient is a student and a U. S. citizen, and subsidized medical, vision and dental insurance are not offered as part of the Fellowship award, payment can be made directly to the student's account through the Office of Student Financial Aid (OSFA), provided that the student is enrolled during the semester in which the stipend is disbursed.

If the recipient is a non-resident alien student, a post-doctoral trainee, or the Fellowship offer includes subsidized medical, vision and dental insurance, the stipend payment must be processed through payroll.  The department offering the Fellowship award submits an Electronic Personnel Action Form (EPAF) transaction as a Job Change Reason Code "Award".  Non-Resident Alien recipients must have or apply for an Individual Tax Identification Number (ITIN) to receive payment. The Office of International Students and Scholars will assist non-resident alien students with completing an ITIN application. All fellowship payments are scholarships and as such, require notification to the Office of Student Financial Aid (OSFA) regardless of the payment method selected.

Payment via OSFA:

Responsibility

Action

Department

  1. Complete an internal letter of offer and obtain the appropriate signatures or retrieve a copy of the external fellowship award offer letter.

  2. Complete the Payment Authorization Form.  Note: Fellowship stipend payments are unrestricted awards, i.e. the payment is not restricted to payment of the tuition assessment and may be reimbursed in total or in part to the student after the tuition balance has been paid.

  3. Submit the Payment Authorization Form to OSFA.  The payment will be applied to the student's tuition account.  A reimbursement check may be issued to the student if payment funds remain after there are no outstanding amounts owing on the account.

Business Manager

  1. Verify fellowship eligibility meets IRS guidelines for non-service related awards.

OSFA

  1. Review information, add award information to student resources and schedule award payment(s).

Payment via payroll (EPAF Transaction):

Responsibility

Action

Department

  1. Complete an internal letter of offer and obtain the appropriate signatures or retrieve a copy of the external fellowship award offer letter.

  2. Ask the student or trainee to complete and return a Citizenship Declaration for Fellowship Recipient Form.

  3. If the award includes subsidized benefits, and the recipient chooses to enroll, the Employee Benefit Enrollment/Change Form must be completed and returned to the department or forwarded to Total Compensation and Wellness (TCW).

  4. Complete the Fellowship Eligibility and Determination Questionnaire.  All questions should be answered and any negative responses require Business Manager?s approval prior to processing the EPAF transaction.

  5. If the fellow is a NRA, ask the recipient to complete, sign and return a W-8BEN form..  This form will serve as the NRA?s tax treaty application.

  6. Send OFSA an email (aa4112@wayne.edu) informing them of the award.  Provide the recipient's name, ID, award amount and duration of the award.  The fellowship award is considered a resource and will be added to the student's total resources in determining financial aid eligibility.

  7. Scan and index all documents into the appropriate Application B-H-ID X-tender Document Type file as listed below.

    1. The award/offer letter should be indexed into the Finance documents, indicating   FD-AWARD LETTER as the comment.

    2. The Citizenship Declaration form should be indexed into the Payroll documents, indicating PAY-STIPEND as the comment.

    3. The questionnaire should be scanned in Finance documents, indicating FD-QUESTIONNAIRE as the comment.

  8. Process the EPAF transaction following procedures for EPAF-NEWPOS AWARD found on WSU Human Resources EPAF home page, making certain to indicate the mandatory approval Levels 40 and 52.r

Business Manager

  1. Verify that the fellowship eligibility requirements meet IRS guidelines for non- service related awards.

  2. Review scanned and indexed documents to confirm the recipient's eligibility for the award, that all the departmental actions have been fulfilled and that the information on the EPAF transaction is consistent with the award documents (e.g. stipend amount).

  3. Approve the EPAF.

OSFA

  1. Add award to student's resources (and determine eligibility for financial aid, if appropriate).

5.0 Related Policies and Procedures

UP 00-02 Position Definitions and Terms of Appointment For Titles Held by Graduate Students and Postgraduate Trainees

APPM 3.2.14 Graduate Fellows, Undergraduate Fellows

APPM YYYY Postdoctoral Trainees (currently in development, coming soon)