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Definitions of Award, Prize, Scholarship, and Grant

 

 

 

 

 

 

 

 

Award

  • Definition: Financial support based on achievement, performance, or other criteria. The grantor does not specifically state that the money should be used for educational expenses.
    Example: Departments and schools honor students at award ceremonies held at the end of an academic year. Certificates are typically given to students at that time.
  • Tax Implication: US citizens – include in taxable income on your tax return
    A 1099 will be issued for amounts greater than $600
    International students – 30% tax withholding
    Reported on a 1042-S form

Note: For International student's taxes may have to be withheld on all of these forms of payments.
Note: All of these forms of payments must be considered educational resources for the student per federal regulations. Therefore, they have to be reported to the Division of Financial Aid.

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Prize

  • Definition: Recognition based on competition or other criteria.
    Example: A competition is held and prizes for 1st, 2nd, and 3rd places are awarded to students.
  • Tax Implication: US citizens – include in taxable income on your tax return
    A 1099 will be issued for amounts greater than $600
    International students – 30% tax withholding
    Reported on a 1042-S form

Note: For International student's taxes may have to be withheld on all of these forms of payments.
Note: All of these forms of payments must be considered educational resources for the student per federal regulations. Therefore, they have to be reported to the Division of Financial Aid.

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Scholarship

  • Definition: Financial support based on academic achievement or other criteria that may include financial need. The donor of the scholarship sets the criteria for recipient selection. The grantor specifically intends money be spent to defray the costs of study, training, or research. Proceeds of the scholarship offset the cost of the student's education for an upcoming or current academic year, depending on when the student receives the funds.
    Example: Departments, schools, or the Division of Financial Aid select recipients based on the criteria of the scholarship agreement (major, grade level, grade point average, financial need, or a combination other restrictive criteria). Credit for the scholarship is reflected on the student's invoice for tuition/fees and/or housing.
  • Tax Implication: Portions of the scholarship used to pay for qualified expenses, such as tuition, books, and fees, are not taxable income. The amount exceeding qualified expenses is taxable income for both US and international students. There is no tax withholding on scholarships for US citizens. There may be a 14% tax withholding for international students, depending on what country they are from.

Note: For International students, taxes may have to be withheld on all of these forms of payments.
Note: All of these forms of payments must be considered educational resources for the student per federal regulations. Therefore, they have to be reported to the Division of Financial Aid.

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Grant

  • Definition: Financial support based on academic achievement or other criteria that may include financial need. A grant recipient is selected based on specific criteria, which is typically set by the federal or state governments or the institution. Generally the proceeds of the grant are used to offset the cost of the student's education for an upcoming or current academic year for performance or criteria met during the previous academic year.
    Example: The Division of Financial Aid selects recipients based on financial criteria and/or grade level and cumulative grade point average as well as other criteria. Credit for the grant is reflected on the student's bill for tuition/fees and/or housing or a check is prepared and given to the student if other assistance has paid fees and housing.
  • Impact for the student and the institution: The institution is required to report the grant as part of the student's total resources that are used to help offset the student's cost of education for the academic year.
  • Result: As new resources are added to the student's financial assistance for the academic year, federal regulations governing the institution may require a small number of students to repay certain federal funds. In addition, the type of funds that certain students receive may also require that the institution withhold taxes from the proceeds of the grant.

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Annually Funded

  • An account that has no endowment to support it. May be non-recurring.

 

Assistantship

  • An academic job held by a student, which involves pay for services rendered. Either graduate or undergraduate.
  • The department providing the assistantship determines the nature of undergraduate assistantships.
  • Graduate assistantships are classified as Teaching Assistantships (TA) or Research Assistantships (RA).
  • Teaching and Research Assistantships receive a full or partial tuition waiver.
  • A monthly stipend is paid to Teaching Assistants for the performance of teaching duties. Research assistants also receive a stipend for research duties (research is typically not related to the student's thesis research).

 

Deserving/Worthy

  • These terms can be found in old endowment agreements and refer to merit.

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True Endowment

  • A separate fund, the principal of which cannot be spent. The principal is maintained in perpetuity and invested for the purpose of producing present and future income, which may be either expended or added to principal. These are donor-specified.

 

Quasi Endowment

  • A separate fund, the principal of which may be spent, but is primarily intended to be maintained in perpetuity. Present and future income may be expended or added to principal. These are department-specified, usually funds from several donors with common designation.

Term Endowment

  • A separate fund, earnings of which may be expended or added to principal. Upon the passage of a stated period of time or the happening of a particular event, all or a part of the principal may be expended.

 

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Endowment Supported Fund

  • Refers to a fund into which earnings from an endowment are placed for expenditure.

 

Expendable Account

  • An account intended to be used to zero balance, perhaps over a period of more than one fiscal year.

 

Fellowship

  • Financial support to reduce the cost of a graduate student's education. Some fellowships include a tuition waiver or a payment to the University in lieu of tuition. Fellowships may include stipends to cover living expenses.
    Students receive payments to assist them in pursuing a course of study or research. This payment is not a payment for teaching, performing research, or other services. Fellowships are taxable income to the recipient. Exclusions to the taxable income are amounts used to pay for tuition/fees and books and supplies.

 

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Financial Aid

  • Money provided to a student to help pay for the student's education from federal, state, institutional, and private sources. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).

 

Financial Aid Package

  • The financial aid package is the complete collection of scholarships, grants, loans, and work-study employment from all sources (federal, state, institutional, and private) offered to a student to enable him or her to attend the University.

 

Financial Need

  • A federally mandated calculation. Standard cost of education less the family's contribution equals the student's financial need.

 

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Graduate Student

  • An individual working toward a post-Baccalaureate degree or certification.

 

Loan

  • Financial support which must be repaid, usually with interest.

 

Merit-based Financial Aid

  • Funds provided to a student on the basis of some achievement.

 

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Need-based Financial Aid

  • Funds provided to a student on the basis of financial need.

 

Outside Award or Outside Scholarship (also known as Private Scholarship)

  • Financial support to a specific student determined by an outside entity. Recipient selection is performed by the funding source (e.g., organizations, clubs, trusts, and foundations).

 

Professional Student

  • Individual enrolled in a professional degree program.

 

Undergraduate Student

  • An individual enrolled in an Associate or Baccalaureate degree program.

 

References

  • Purdue Excellence 21 Scholarship Task Force
  • Glossary of Financial Aid Terms: ( http://www.finaid.org)
  • Audits of Colleges and Universities Audit Guide

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