When paying monies to a student, it is critical to ensure the payment has been classified correctly in order to satisfy compliance requirements with Internal Revenue Service, federal financial aid regulations, CSU policies, and donor intent. While CSUSM strives to comply with intent of donors when administering funds to students on their behalf, donor intent, no matter how specific or strongly worded, may not supersede the university’s obligation to meet federal and state financial aid rules, IRS regulations, Fair Labor Standards Act, or other CSU rules or guidelines.
At CSUSM, there are four categories of payments to students:
|Financial Aid||Payments that assist the student in their pursuit of education (tuition, fees, books, equipment required for a course, or room and board). These payments are paid via the Financial Aid office and the student information system (PeopleSoft) with IRS reporting via 1098T.|
|Wages||Payments representing compensation for services rendered where CSUSM is the primary beneficiary. These payments are paid via Payroll with IRS reporting via Form W-2.|
|Travel Reimbursement||Payments reimbursing students for travel whenever, via the travel, a student is formally representing CSUSM (CSUSM is the primary beneficiary of the student travel). No IRS reporting.|
|Prize/Award||Payments for winning a contest or an award where the funds for both do not have to be used towards educational expenses (tuition, fees, books, equipment required for a course, or room and board). These payments are paid via Accounts Payable with IRS reporting via Form 1099-MISC.|
By complying with all relevant rules, regulations, and policies, CSUSM will ensure payments will be made in the most appropriate manner and avoid any unintended negative financial impacts for our students (ex: student unnecessarily receives an IRS Form 1099).
Ensure that all procedures that support the administering of payments to students comply with federal financial aid rules, IRS regulations, and CSU/CSUSM policies (such as employment).
Ensure that all appropriate parties at CSUSM involved in administering payments to students:
While all parties involved in administering payments to students share responsibility, the process ultimately begins with the payer making the proper determination as to the classification of payment (Guidelines & Procedures, Page 8).
It is the responsibility of each awarding department to monitor expenditures from their accounts, including funds awarded, disbursed, adjusted, or cancelled.
If funds were donated, awarded as part of a grant, or have any spending restrictions, the department selecting recipients is responsible for ensuring awards comply with donor intent (but not to supersede policy).
Recipients of payments that fall under the Financial Aid category should be made aware that their award may impact their financial aid package and must be taken into consideration when the financial aid department determines eligibility for funds from other sources, including federal loans. The Financial Aid Office has the responsibility of determining whether adjustments are necessary.
In most cases, departmental awards will not impact a student’s aid package when processed through the student information system. If other aid must be adjusted to accommodate new funds, loans will typically be reduced first. Lowering a student’s educational loan debt should be considered a positive outcome.
The above decision tree is in a web format, which easily allows departments or individuals to answer a short series of yes/no questions to determine the category of payment.
The entire Payments to Students Guidelines & Procedures document contains all relevant information necessary for departments to identify the proper classification of each payment to students.
If, after reviewing the decision tree above or the web-based decision tree, questions remain, please email questions and scenarios to firstname.lastname@example.org.