To serve as a comprehensive guide for any payments made to students at

Indiana University.

June 2021

Introduction

prescribed in regulations for federal aid recipients.

Indiana University strives to comply with the intent of donors when administering funds to students. However,

donor intent, no matter how specific or strongly worded, may not supersede the university’s obligation to meet

federal and state financial aid rules and IRS, Fair Labor Standards Act, Affordable Care Act or other regulations.

When requirements conflict with each other, the most stringent of applicable rules prevails regardless of the

funding source for payments to students.

At Indiana University, there are four acceptable ways to provide funds to students. It is important to understand

which method is correct for each set of circumstances to facilitate accurate treatment and reporting for both the

student and the university. In order of prevalence of use, the methods are:

provided are also recorded in the SIS.

in a contest not restricted to students, or non-IU students participating in IU programs with IU

funding.

It is not appropriate to circumvent these systems to provide compensation or other funding through other means,

for example, by crediting a student’s Crimson Card or by giving them a guest card.

The decision tree on the next page illustrates basic rules for characterizing payments, recipients and intent in a

way that leads you to the correct payment method.

Financial Aid in the SIS

The majority of institutional funds made available to students should be awarded in the IU Student Information

System (SIS). This facilitates proper internal and external reporting, and ensures compliance with IRS rules and

the requirement that any educational benefits paid to a student, regardless of the source, be considered in

determination of eligibility for federal financial aid. “Financial aid” includes student loans.

Institutional funds for students that are not wages and not loans are considered scholarships (IU term for awards

to undergraduates) or fellowships (IU term for awards to graduate and professional students) and must be

awarded or accounted for in the SIS.

therefore, represents a cap on total funding.

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Federal aid recipients with aid based on financial need cannot have need-based funds in excess of need,

which is defined as the difference between COA and the Student Aid Index (SAI), a figure determined

for each student who completes the Free Application for Federal Student Aid (FAFSA).

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An ‘over-award’ occurs when the student receives more aid than he or she is eligible to receive. This may be

need-based aid in excess of need, total resources in excess of COA, or both. IU is required to resolve all

over-awards.

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Recipients of scholarships, fellowships and fee remissions should be informed that institutional financial aid

will be taken into consideration when the Financial Aid Office determines eligibility for funds from other

sources, including federal loans.

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In many cases, Departmental Aid will not impact the student’s other aid when processed through the SIS. If

other aid must be adjusted to accommodate new funds, loans will typically be reduced first. Lessening a

student’s education loan debt is a positive outcome.

over-awards and potential penalties and fines for the university.

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Scholarships, fellowships, or fee remissions processed after the Financial Aid Office creates financial aid

packages may result in a reduction of aid previously offered, so it is best to make awards before the

Financial Aid Office determines eligibility for other funds. Contact your Financial Aid Office for the dates

by which your awards should be made, for new and returning students, for both the academic year and

summer to reduce confusion and frustration.

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Regardless of when an award is entered in SIS, or when the student needs the funds, aid must be attributed

expected costs and financial need limit eligibility for additional funds.

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A student’s COA may be increased, on appeal with documentation, to add additional education-related costs

in instances where there is insufficient room in the need or COA to accommodate the full amount of all

potential awards. Financial aid staff reviews each appeal on a case-by-case basis, makes allowable

adjustments to the COA and may post all or a portion of the award in the SIS. A department may wish to

award funds to cover costs, programs, research or travel not directly related to the student’s pursuit of a

degree. Regardless of the perceived value of the experience the department intends to fund, the

determination of the appropriateness of a requested increase in the student’s COA is at the sole discretion of

the Financial Aid Office.

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Students may also appeal to have documented unusual or unanticipated expenses considered in their COA.

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Students enrolling in Education Abroad programs have their expected cost of attendance updated for the

term(s) during which they will be away. See the Student Travel (SIS & Chrome River), section on

Education Abroad for information on COA adjustments for these students.

IU employees should never offer personal tax filing advice. Tax resources for students include IRS publication

970 and the IU Tax webpage for Student Taxes.

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IU generates a Form 1098-T each year in January for all U.S. residents enrolled as regular students. IU does

Consult the University Tax Services webpage for more information about the Form 1098-T.

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It is not appropriate to pay a student with a scholarship if the recipient is required to perform a service that

benefits the university. If the student is working as a tour guide, peer mentor, tutor or in some other capacity

for a specified number of hours with campus supervision, scheduling or oversight, this is work and

compensation should be made in the form of wages, and taxed as such.

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Due to the Affordable Care Act, IU must track all hours worked by students to ensure that total hours do not

constitute a right to benefits it is not our intention to offer.

will automatically be withheld from the student’s bursar account. Additional tax considerations can apply

and, depending on status, the international student may qualify for certain tax treaty benefits, which would

entitle the student to no tax withholding. See University Tax Services webpage for International Students

Scholarships/Fellowships & Taxes.

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international student population to assist in US tax preparation and filing.

appointees who are not IU students. This includes NIH training grants and fellowships where IU does not

direct and control the individual or own the research. If IU directs, controls or owns the research, the

appointee is an employee. In both cases, post-doctoral appointees qualify for health insurance.

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“Restricted” gift aid refers to funds that are limited to paying certain expenses, such as tuition. Other

restrictions may limit which students may be awarded.

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An award limited to paying tuition is technically a fee remission, even if it is called a scholarship. Both are

financial aid. “Unrestricted” aid can pay any charge.

The Chrome River Travel & Expense System is always used for travel on university business where the

university is the primary beneficiary of the travel (see “accountable plan” definition). Some examples of student

travel that should be processed through Chrome River are:

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employee;

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A student is attending a conference to represent IU, presenting a faculty member’s research or joint

research with or on the department’s behalf (IU is primary beneficiary);

for a former student who has graduated if you want to reimburse travel costs incurred after separation from the

The Chrome River system has specific, optional mechanisms to make Group Travel payments in cases where

three or more students travel with a faculty or staff member and expenses are uniform across the student group.

The payment is recorded against a lead instructor’s name (for BUY.IU check requests) or Employee ID number

(for direct billed charges). A roster of student names must be submitted along with the expense report in Chrome

Instead of per diem payments, actual receipts are used for the reimbursement of meal costs for the group.

However, these payments cannot exceed the amount allowed by applicable per diem regulations.

initiating a Group Travel payment.

IU Education Abroad, under the IU Office of the Vice President for International Affairs, is responsible for

review and approval of all study abroad programs for students on all Indiana University campuses (see

Non-IU Programs. For both, any financial aid must be processed through the SIS.

IU Programs Non-IU Programs

May be “IU-Administered” or “IU Co-Sponsored.”

“IU Administered” refers to faculty-led programs

organized by an IU academic unit or campus.

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IU controls program admission and enrollment

Grades count in GPA

Most financial aid can be applied to costs

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Student applies directly to an outside entity

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Student may only receive transfer credit

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Grades not calculated in GPA

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Do not count toward senior residency

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Financial aid applicability varies

Abroad (BL and IUPUI) and the campus Financial Aid Offices to update cost of attendance for these programs.

Two important rules to keep in mind related to Education Abroad and financial aid:

a. Regular tuition income (flat fee or credit-hour based, as that income normally passes to the academic

unit’s budget);

b. A fee collected through the Office of the Bursar according to IU Policy - Student and Other University

Fees Approval

PRIZE POLICIES

If you are awarding a prize to students for contests or drawings, all IU and IU Foundation policies apply

irrespective of the funding source, or whether or not the winnings must be treated as a scholarship. If you are

conducting (alone or with a sponsor or vendor) a contest or drawing for which a prize will be awarded, it is

important that you review Indiana University policy FIN-ACC-640: Contests, Drawings, Games, and Prizes.

contest must refer to Tax’s Standard Operating Procedure 9.03.

ACCOUNTABLE PLAN

This IRS term is used by IU to refer to reimbursable ordinary and necessary business expenses incurred in the

conduct of official university business. These include approved payments for travel, moving, faculty research

accounts and allowable out-of-pocket expenses. Refer to the IU Policy, Reimbursement Under the Accountable