Changes to Student Payments FAQs

General

Why was a change in student payments necessary?: All student financial aid payments are required to be coordinated with other aid received to ensure that total resources from university and external sources do not exceed student need when the student is receiving any state or federal support. The University took a comprehensive look at how student payments are made and found inconsistencies and errors that needed to be corrected to ensure we remain compliant with state and federal regulations.
How is financial aid defined?: Financial aid includes all monies paid to support students *unless* payments are to compensate for work performed or reimbursement of travel performed on behalf of the University. In other words, any travel, research, or other activities that are primarily for the benefit of the student and their education (including training grants) are considered financial aid for reporting purposes. The Office of Scholarships and Student Aid administers federal and state aid for the University. All non-compensation funding must be counted to determine the student’s aid eligibility.
Will these changes affect how I receive funding for my research or teaching assistantship?: No, these changes are focused on non-service funding, not compensation. Research and teaching assistantships are service appointments and will continue to be paid through payroll.
Will the changes affect qualification for emergency funds through the university?: No, students may apply for emergency assistance (using the normal application process) through the Dean of Students Emergency Grant Fund , Graduate Professional Student Government Emergency Fund, Carolina Impact Fund, and/or Office of Scholarships & Student Aid Emergency Loan fund.
Is this change primarily an administrative one to save money for the University?: No. None of these changes were made for cost savings. The change is being implemented to address compliance and accuracy in reporting student aid and ensures the University can continue to administer federal aid. Any administrative and procedural enhancements are secondary to compliance and reporting accuracy.
What should a student do if they think their financial aid will be impacted by this change?: Students should contact the Office of Scholarship and Student Aid if they have questions about their financial aid package and how funding they accept from University sources may impact their aid eligibility.

Tax Implications for Students

How will this change affect students' tax liability? Will the University withhold state and federal income tax from financial aid payments, and if not, will the students be expected to make quarterly prepayments to avoid penalties from the IRS?

Payments for services would potentially have FICA (Social Security and Medicare) taxes withheld. Payments which are paid through Payroll Services will have applicable Federal and state taxes withheld based upon the individual’s tax forms (i.e., W-4 and NC-4) and the defined tax withholding tables.

Payments disbursed outside of Payroll Services typically will not have taxes withheld. In those cases, individuals should consult IRS and state guidance on if and when estimated tax payments might need to be made. As tax liability is based on many factors for each individual, we cannot speak definitively on how this will affect each student. However, student awards applied to student expenses tend to receive a more favorable tax treatment than 1099 MISC or W-2 compensation.

How are the payments processed via GradStar reported?

Payments processed from GradStar will be reported on a 1098-T. Form 1098-T is an informational tax document to aid taxpayers in determining whether they are eligible to claim a tax deduction or one of the education tax credits on their federal income tax return. More information can be found on the Cashier’s Office website.

Payments processed by Accounts Payable campus vouchers were reported as compensation, either on a 1099-M or to payroll to be included on the W-2.

If this change is implemented, can the University provide tax consultation services to answer students’ questions each year?

Current university employees, due to the credentials required to provide tax consultation, are unable to provide these types of services. However, we can provide suggested resources outside the university to assist students with filing taxes.

Training Grants

How are training grants, stipends, and financial aid defined?

A training grant is an agreement that provides a coordinated training program for students, postdoctoral researchers, staff, teachers and/or faculty who are selected by the institution to be a part of the training program. Payments provided to trainees from training grants are intended to defray living and/or training related expenses while the trainee participates in the training program.

A stipend from a training grant is a payment that is made to an individual to support a training/learning experience. Stipends are frequently in the form of a “living allowance” and are intended to offset living expenses. Stipends are not compensation for work performed and there are no effort reporting requirements related to receiving a stipend payment.

Financial aid includes all monies paid to support students *unless* payments are to compensate for work performed or reimbursement of travel performed on behalf of the University. In other words, any travel, research, or other activities that are primarily for the benefit of the student and their education (including training grants) are considered financial aid for reporting purposes. The Office of Scholarships and Student Aid administers federal and state aid for the University. All non-compensation funding must be counted to determine the student’s aid eligibility.

Why is the University changing how it administers training grant payments to students?

The University took a comprehensive look at how student financial aid payments are made and this change will ensure we remain compliant with state and federal regulations. The project team identified that this change aligns with how other Universities administer student payments on training grants as well.

Will this apply only to students on T32s, or to all students with external fellowships? If this IS applicable to all external funding sources, how will this affect awards specifically for conference travel?

The changes are applicable to all financial aid provided by the university. If a student receives funding from sources external to the university, the student should report that to financial aid so they can make any necessary adjustments.

Travel for the student’s academic benefit is financial aid, so conference travel would be treated as such and will be reported on form 1098-T as scholarships/grants.

Why do payments made from a T-series grant to a graduate student count as financial aid, but payroll made to a student from a faculty’s research grant (done via payroll) does not?

Students paid through payroll are being compensated for work performed.

Trainee payments from training grants are not considered compensation for work performed but are defined as funding primarily for the benefit of the trainee and their education (no effort reporting).

Why are payments from T-series grants considered to be the same as a fellowship made to a student, such as an NIH-NSRA/HHMI/NSF?

The nature of the payment, not the sponsor, controls whether the payment is a stipend or compensation. If the payment is compensation for work performed, the payment is not a stipend — it is compensation. If the payment is specified to help defray living expenses, or a similar description, it can be classified as a stipend.

Has the university considered that this change will affect students' credit and financial ability? If their stipend is no longer considered income, and affected students no longer receive W2s, this may affect their credit and ability to secure mortgages, loans, or other lines of credit. A large part of the appeal of the training grants are to secure financial independence and receive a living wage, so proof of income is critical.

Typically, departments provide documentation to show the student is receiving funds and this process has been successful in helping students secure lines of credit.

Why can postdocs appointed to a T-series training grant have their stipends routed through payroll, but graduate students cannot?

Payroll can only manage FICA exemptions and other fringe benefits associated with compensation. As noted above, support for graduate student trainees is classified as financial aid so cannot be administered through payroll.

In the future, will it be possible to program GradStar to distribute training grant payments monthly instead of only per semester?

At this point, it is not possible to distribute monthly payments, but the project team will revisit periodically to see if a change can be made. While we recognize that this means students will need to budget the funds over the course of the term, they will in fact receive more money earlier so should not be disadvantaged.

How do I decide which method to use to pay my students on training grants?

Please reference the matrix on “Understanding The Types of Award Payments.”

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