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Fellowship and Scholarship Payment Guide

This guide provides information on how to request the payment of a departmental scholarship or fellowship grant.

A department may occasionally request a scholarship or fellowship payment be made to a student or post-doctoral fellow from departmental funds that allow for such an expenditure. Citizenship, residency, degree candidacy status, and fund source requirements are all factors that influence how a payment request of this type is processed.  For more complicated situations, please contact the FAST/AP Help line at 459-4488 with questions or locate your representative directly.

  
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UC_W-8BEN
  
  
Payee_Setup_204.pdfPayee_Setup_204
Payee_Setup_Instructions.pdfPayee_Setup_Instructions
Vendor_Electronic_Funds_Authorization.pdfVendor_Electronic_Funds_Authorization
  
  
Direct_Payment.pdfDirect_Payment
Fellowship_Scholarship_Worksheet.pdfFellowship_Scholarship_Worksheet
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  • Before you start

    Important information to know:

    Special conditions
    The following conditions apply to this type of payment:

    • There are two types of grants.
      • A scholarship grant is awarded to an undergraduate student as aid in the student’s pursuit of higher education. Scholarships are coordinated by the Financial Aid Office.
      • A fellowship grant may be awarded to a graduate student or post-doctorate candidate. Fellowships are coordinated by the Division of Graduate Studies Office.
    • The handling of a scholarship or fellowship transaction, and related tax treatment and tax reporting differs depending on the following factors:
      • Recipient’s citizenship or residency status
      • Scholarship or fellowship requirements, if any
      • Recipient’s degree or non-degree candidacy status

    Tax information
    Payments may only be made to recipients with a Social Security Number or an Individual Taxpayer Identification Number (ITIN). Use IRS Form W-7 Application for IRS Individual Taxpayer Identification Number to apply for an ITIN number.

    Payment
    If this is the first time the recipient will be receiving a UCSC non-payroll payment, complete a Payee Setup 204 form.

    Payment to Foreign nationals will be expedited by ensuring that all needed documents are submitted along with the request for payment.
    See: Foreign Scholarship Fellowship Checklist



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  • Fellowship considerations for extramural awards

    There are two primary determining factors when deciding whether or not an extramural grant is considered to be a fellowship

    • The descriptive wording in the grant and
    • Who benefits from the research

    Description in the grant: The grant is administered as a fellowship and is subject to tax withholding and reporting when the grant:

    • Specifically includes the term "fellowship" or
    • Doesn't include the term "fellowship", but includes fellowship components such as room and board or a dependent allowance

    PI Benefit: The PI benefits when student expenses are not considered to be a fellowship, i.e.

    • Grant is intended to benefit the PI's research and
    • Grant budget includes a line item for student travel or other non-payroll expenditures

    Student Benefit: Student expenses are considered to be a fellowship when:

    • Grant is intended to benefit the Student's course of study, such as dissertation research.
      Note: Grant does not necessarily have to include the term "fellowship" in the grant budget or description of the research

    Mutual Benefit: Student expenses are not considered to be a fellowship when:

    • Grant mutually benefits both the PI's research and the student's course of study

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  • Eligibility

    Scholarship

    • A scholarship recipient must be an undergraduate student enrolled at UCSC.
    • The recipient may be pursuing studies or conducting research at an educational organization other than the one actually conferring the degree and still be considered a candidate for a degree.
    • The recipient must demonstrate reasonable progress towards earning a degree.

    Fellowship

    • A fellowship recipient may be a graduate student, faculty, post-doctoral fellow, or a non-degree candidate, such as a student enrolled in a "certificate program."
    • The fellowship recipient is expected to develop expertise in a specific area of study, work on a thesis or present a scholarly paper.
    • The terms of the fellowship grant may include specific deliverables, or require participation in research activity.

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  • Allowable costs

    Scholarship

    • Used to pay tuition and fees required for enrollment, and books, supplies and equipment required of all students in a course of instruction.

    Fellowship

    • Used to pay tuition and fees required for enrollment, and books, supplies and equipment required of all students in a course of instruction.
    • May also be used to pay for incidental expenses such as room and board, travel, research, and expenses for equipment and other items not required for either enrollment or attendance in a course of instruction.

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  • Ways to pay

    This type of expense is procured by requesting a payment to be made by completing and submitting a Direct Payment form.

    • The Campus Purchasing Card cannot be used to procure this good or service.
    • Out-of-pocket payment for this type of good or service will not be reimbursed.

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  • Requesting a direct payment

    Non-Postdoctoral Scholar
    Follow these steps to request a scholarship or fellowship grant payment:

    • If this is the first time the recipient will be receiving a UCSC non-payroll payment, have the recipient complete a Payee Setup 204 form.
    • Use the chart provided in the appendices to obtain the following information:
      • The appropriate campus office to notify about the awarding of the scholarship or fellowship grant.
      • Tax information, if any, that needs to be shared with the prospective scholarship or fellowship grant recipient.
      • Financial Information System (FIS) accounting coding information.
    • Complete a Scholarship Fellowship Worksheet.
    • Complete a Direct Payment form and obtain approval from an authorized expense approver.
      • Submit the two completed forms and any other supporting documentation to the divisional or departmental business office for review and “Tier 2” approval.
      • The divisional or departmental business office will submit the forms and other supporting documentation to the Financial Administrative Services and Transactions (FAST/AP) Office for processing.

    Post-Doctoral Scholar

    • Use the decision matrix to obtain the following information.
      • The appropriate campus office to notify about the awarding of the scholarship or fellowship grant.
      • Tax information, if any, that needs to be shared with the prospective scholarship or fellowship grant recipient.
    • Contact the Payroll Office to request a fellowship grant payment.

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  • Receipt and documentation requirements

    Non-resident aliens
    Refer to the appendices for information about documentation requirements associated with grants provided to non-resident aliens.


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  • Authorization and approval

    Only an individual with written delegated authority provided on the Signature Authorization Approval Form may approve the payment.

    An employee having delegated authority may not approve his or her own reimbursement or payment request.


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  • Tax withholding and reporting

    The portion of a scholarship or fellowship grant used to pay for costs required of all students in the course of instruction, such as tuition and fees, and required books, supplies and equipment, is considered “qualified,” and is not reported to the Internal Revenue Service (IRS).

    The portion of a scholarship or fellowship grant payment provided under the following circumstances is considered wages of the recipient for tax reporting and employment tax purposes:

    • Payment to the recipient for the performance of teaching, research or other services may be considered wages.
    • Payment is for past, present, or future teaching, research or other services provided as a condition of accepting the grant.
    • Payment enables the recipient to pursue studies or research that primarily benefits the grantor (fund source provider).

    The amount of a scholarship or fellowship grant used to pay for incidental costs not required for enrollment or attendance in the course of instruction, such as room and board, travel, research-related expenses, and non-required equipment and supplies, is considered “non-qualified,” and is usually subject to the following tax treatment:

    • United States citizen or resident alien
      • The recipient is required to the report the non-qualified amount of the grant on his or her US and California tax return.
      • The grant payment is not subject to withholding for Federal or state income taxes; although it may still be taxable as income.
      • The grant payment is not subject to IRS Form 1099 reporting.
    • Non-resident alien
      • The grant payment is subject to withholding for Federal income taxes.
      • The grant payment is subject to IRS Form 1042-S reporting.
      • The recipient is required to report on his or her US and California tax return, any non-qualified amount that exceeds the amount reported on IRS Form 1042-S provided by UCSC.

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  • Funding sources

    A scholarship or fellowship payment may only be charged to certain fund sources. Contact your divisional business office for additional information.


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  • Common oversights

    Speed up getting a scholarship or fellowship processed by avoiding these common oversights:


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  • Policy references

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  • Where to get help

    More assistance is available:

    • Purchase order, change order, and Employee-Vendor Conflict of Interest Evaluation Form-related questions, email: buy4me@ucsc.edu
    • For all other questions please contact the FAST/AP Help line at 459-4488 or locate your representative directly.

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  • Relevant Appendices

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