Guidelines and Procedures
Why Does it Matter How We Pay a Student?
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 Chico State 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 Chico State, there are four categories of payments to students:
Payment Categories
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 through the Financial Aid office and the student information system (PeopleSoft) with IRS reporting via 1098T.
Wages
Payments representing compensation for services rendered where Chico State is the primary beneficiary. These payments are paid through Payroll with IRS reporting via Form W-2.
Reimbursement
Payments to students for general reimbursements. If the reimbursement is for travel, the student must be formally representing Chico State (the campus being the primary beneficiary of the student travel). No IRS reporting.
Prize/Award
Payments for winning a contest or an award, when the funds 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 through Accounts Payable with related IRS reporting.
Resources
- Determine Payment Category: Payments to Students Tool
- Submit payment worksheet to Financial Aid & Scholarship Office: TeamDynamix ticket(opens in new window)
- View other resources(opens in new window) including forum and presentation slides
Purpose of Guidelines and Procedures
Best Interest of Students
By complying with all relevant rules, regulations, and policies, Chico State 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).
Compliance
Ensure that all procedures that support the administering of payments to students comply with federal financial aid rules, IRS regulations, and CSU/Chico State policies (such as employment).
Accountability
Ensure that all appropriate parties at Chico State and Chico State Enterprises (CSE) involved in administering payments to students:
- Are aware of, and understand, the Payments to Students (and related) policies and guidelines
- Fully understand their responsibilities and can fulfill their duties in compliance with federal financial aid rules, IRS regulations, and CSU/Chico State policies and procedures
Responsibilities
Making 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.
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 and/or funder 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. Payments 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.
Decision Tree
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. Please navigate to our Getting Started page to use this format.
The entire Student Payment Categories (PDF) document contains all relevant information necessary for departments to identify the proper classification of each payment to students.