The discussion on the BHWET quarterly meeting was very informative. It is great to see that we are not facing the stipend situation alone. After an extensive conversation and discussion, our institution’s financial aid department reached out to the Department of Education as a basis of adjusting the student’s award.
DOE stated “…the stipends paid through this grant must count as Estimated Financial Assistance (EFA). The amounts of these stipends must be coordinated with any other Title IV aid in their award packages to avoid overawarding or overpaying these students according to the limits of the Title IV programs. In addition to the citations that you provided in your question to me (668.16, Hbk V2C3, Hbk V4C3) you may also include this citation from the Handbook V3C7 page 3-145:
When classifying non-FSA sources of aid, if a student receives the award because of postsecondary enrollment (for example, a scholarship from a local social club that requires a student to be attending a postsecondary school), it counts as EFA if it is not considered wages for employment according to federal or state rules,…”
We do pay our participants through requisition; however, their financial aid packets were adjusted to replace their student loans with the $10,000 grant. The students that were not on financial assistance were not impacted, and received the full amount in hand. The students that are on financial assistance essentially broke even. Financial Aid’s response was students on financial aid will have $10,000 less to pay for loans after graduation, so the program is still beneficial to them.
Questions: Will the students essentially be negatively impacted if we issue them a 1099 as additional income plus have their financial aid packet adjusted? How is your institution handling the tax implications?
How is your individual institutions processing participant stipends, and what guidelines and regulations did you use to make them not adjust the student’s financial aid packet?
What do you do about students who are student assistance and paid by the University?
We would love to hear your thoughts. If you want to reach out to our team please email icbhproject@unt.edu or Kimmalla.Mitchell@unt.edu or 940.369.5703
Hi Kimmalla:
We opted to pursue the route wherein all of our awardees receive a 1099. This decision was made in the draft phase of BHWET program and ultimately affirmed pre and post-award.
The challenge we ran into was the adjustments so that many of our students would not have received any of the stipend, whereas many others wouold have received a reduced stipend. Given that this was not in the spirit of a "cost of living" stipend, we were able to have our system (we are a regional, so many things end up requiring consultation with the mothership) approve the 1099 issuance. Ultimately, there was a process that we needed implemented that historically was not common practice, because it did not have to be- and in the absence of the need for a process, there was not one that suited the spirit of the BHWET program.
We accommodated our BHWET grantee contract to indicate a 1099 receipt and all the associated tax implications and have addressed this in our orientations as well.
We continue to struggle with the stipend issue. It seems that funds can be disbursed with a 1099 or 1098T. I would like to know how many BHWET17 awardees are using each method. Does anyone know how we can gather that information?
Cindy Waltman
Plymouth State University
Hello Cindy,
We struggled with processing our stipend for a while. Our financial aid department is holding strong on their position of counting the student's stipend as part of the student’s Estimated Financial Assistance (EFA). During the next cohort, students will be placed at their internship sites by the project team. We will either explore the possibility of having their Cost of Attendance increased (due to traveling requirements for the grant) or reimburse them mileage. We have not fully explored this possibility, but plan to do so in the fall semester. Our second cohort does not start until spring 2019.
To answer your question, although the stipend is considered part of the Financial Aid award package, we pay our students through Purchase Orders and they will receive a 1099 instead of a 1098T. The stipend is taxable either way, since it is not used for tuition. We decided to pay them through the 1099 process, so the students can receive their funds on the first day of class rather than wait for their financial aid disbursement. Also, it is easier for us to track payment through the system.
I would love to speak with you more about your process and brainstorm to come up with a solution.
Kimmalla Mitchell
Project Coordinator - The Integrated Care and Behavioral Health Project
University of North Texas – College of Education
Department of Counseling and Higher Education
940.369.5703
Kimmalla.Mitchell@unt.edu
ICBHproject@unt.edu