Stipend
A stipend is a certain amount of money that is paid to certain people who are unable to receive a salary for the duties they do. Thus, the recipient acquires knowledge and experience and receives minimal remuneration. Students, interns, trainees, apprentices, fellows, and clergy can receive a stipend to offset some costs, because the stipend is usually less than a salary.
How a Stipend works
A stipend is not an hourly wage or salary. The amount of a stipend is often fixed, like an allowance. It is paid daily, weekly, or monthly. Students receive a stipend for their studies, instead of a salary, to cover living expenses. Stipends are paid for financial support, instead of salary for their work. Stipends may include benefits (higher education, accommodation, food, have no taxes to pay for Medicare and Social Security).
There are rules under which companies and organizations can manage stipends. They are set by the Department of Labor (DOL). According to these rules, students can be hired for stipends; stipends can be below minimum salary if they are used as a payment for student labor; existing staff cannot be replaced; and students must be the recipient of employment or training, not the company.
The salary and the stipend depend on the company in which the student works. It can be $250 to $500 or more per month. It's a small payment, but it's enough to cover some basic expenses.
Types of Stipends
It was said above that a stipend is not an hourly wage, it is a cheaper option for paying interns. The amount of the stipend depends on the internal rules of the company where the student works. Some companies are ready to cover the cost of accommodation, food, and transport.
Academic research. Institutes, universities, and related organizations often offer stipends and grants to researchers for their projects. They are often provided by people interested in the research, who want to develop the project without financial disruption to the researcher. Funds and similar organizations may offer stipends under similar terms to support projects and to finance their researchers.
Expense related. Stipends can be paid for very specialized purposes. For example, for a student's educational trip to a company or to buy (rent) a computer.
Health Insurance. Often, company interns do not have health insurance, but companies are ready to provide extra money to pay their health insurance. This money is added to the salary and trainees are entitled to pay premiums on it.
Wellness programs. Many companies care about the wellness and health of employees and provide scholarships for employees to purchase a fitness membership (gym, group yoga classes, personal trainer as a part of wellness program).
Job training. Some companies are open to provide a stipend for employees, who want additional training as part of their job specifics and career development. The company provides money to the employee, who spends it on training.
Special considerations
Stipends are taxable income. This means receivers need to keep a part of their earnings. For the 2021 tax year, the tax rate for both programs were 15.3%—12.4% for Social Security and 2.9% for Medicare.
If the student or trainee is identified in the company as an employee, the stipend may be taxable. In that case, they may qualify for minimum salary and overtime pay, if it is available. Also, check that the workers are not listed as interns so that there is no difficulty in getting paid.
Stipends may be granted for writing books, articles, creating translations, digital publications, or reporting on archaeological excavations. These stipends may be awarded by the National Endowment for the Humanities for advanced research involving not only data collection, but also the analysis and interpretation of that data. Such research is usually available to the general public.
