What is a College Stipend and How Do They Work? A Comprehensive Guide

As you navigate through applications for research positions, internships, and scholarships, you’re likely to encounter the term “stipend” quite often. But what exactly is a stipend, and how does it differ from a salary? Understanding the nuances of this term is crucial for comprehending how you’ll receive compensation for your work or studies.

What is a stipend?

A stipend is a form of payment provided to individuals engaged in positions that deviate from the traditional wage system. Unlike salaries, which typically compensate employees for services rendered in an employer-employee relationship, stipends are allocated for various reasons, such as educational pursuits, volunteer work, or as part of a scholarship reward. Essentially, organizations offer stipends to individuals for purposes other than direct employment, often to support their participation in specific programs or activities.

In essence, receiving a stipend entails a different financial arrangement compared to earning a salary. It’s essential to grasp these distinctions to navigate the financial aspects of your endeavors effectively. Understanding how stipends are taxed and utilized differently from salaries can help you make informed decisions regarding your financial management and future opportunities

What is the purpose of a stipend?

The purpose of a stipend differs significantly from that of a salary. Instead of compensating individuals for their work or services rendered, stipends are designed to assist them in covering living expenses while they engage in specific duties or activities. For instance, nonprofit organizations may offer stipends to at-risk youths to facilitate their acquisition of work skills, enabling them to support themselves while learning valuable job-related skills.

In the realm of higher education, stipends often accompany scholarship rewards, particularly for recipients of full-ride scholarships. While scholarships typically cover tuition and fees, there are still additional living expenses associated with attending college. Stipends serve to address these needs by providing students with a flexible amount of money to cover expenses like books and basic living costs.

What is The Difference Between Stipends and Salaries?

It’s crucial to understand the distinction between stipends and salaries. While both result in monetary compensation, their underlying purposes are different. A salary is earned for services performed within the framework of an employer-employee relationship, where the primary objective is to contribute to the organization’s goals or mission. Conversely, stipend earners occupy positions where their personal development is paramount, such as apprenticeships, internships, volunteer opportunities, or scholarship programs.

College stipends are particularly unique in that they do not replace a salary but rather supplement it as an additional source of income. Once awarded a scholarship, students typically receive their stipends automatically, provided they meet internship requirements and remain enrolled in college. While some scholarships may require documentation to ensure stipends are used for approved expenses, in most cases, students have discretion over how to utilize these funds.

Where Stipends Are Offered

Stipends are commonly offered in various scenarios instead of traditional salaries. Here are some situations where you might encounter stipends:

  1. Scholarships
  2. Unpaid internships
  3. Research opportunities
  4. Apprenticeships
  5. Volunteer opportunities
  6. Summer programs

What It Means for You?

If you’re fortunate enough to receive a college stipend, congratulations on securing a scholarship! However, it’s essential to stay informed about any regulations regarding your stipend imposed by the scholarship organization. Be sure to inquire whether you need to provide documentation detailing how you’ve utilized your stipend to fulfill any stipulated requirements.

Furthermore, familiarize yourself with how taxes will affect your stipend. While some college stipends may be tax-exempt, others may not be. Therefore, it’s prudent to ascertain the tax implications beforehand and ensure you accurately complete the required tax documentation. This will help you determine any tax obligations you may have before tax day arrives.


Understanding the difference between stipends and salaries is crucial, especially for students and individuals entering the workforce. While both stipends and salaries provide financial compensation, they serve distinct purposes and come with different considerations.

Stipends are typically offered in situations where individuals are engaged in activities aimed at personal or professional development, such as internships, research opportunities, or scholarships. They are designed to cover living expenses rather than compensate for services rendered. On the other hand, salaries are paid in exchange for work performed and are typically associated with traditional employment.

For students receiving college stipends, it’s essential to be aware of any requirements or regulations associated with the stipend, including documentation and tax implications. By staying informed and understanding the nuances of stipends, individuals can make the most of these opportunities and effectively manage their finances.