What Is a Stipend?

A stipend is a predetermined amount of money that's paid to trainees, interns, and students to help offset expenses. Stipends are often provided to those who are ineligible to receive a regular salary in exchange for the duties they perform. A stipend is generally lower pay than a salary. However, the recipient of the stipend is able to gain experience and knowledge in a specific field.

Key Takeaways

  • A stipend is a predetermined amount of money that's paid to trainees, interns, and students to help offset expenses.
  • Stipends are not hourly-based pay and are often used by employers as a lower-cost option to pay interns.
  • Stipends may be offered to researchers at academic institutions or to cover very specific types of costs and expenses.
  • Interns, apprentices, fellows, and clergy are also common recipients of stipends.

How a Stipend Works

A stipend allows an individual to pursue work that is normally unpaid by helping defray living expenses. Interns, apprentices, fellows, and clergy are common recipients of stipends. Rather than being paid for their services, they're paid stipends to provide financial support while engaged in the service or task. Often, a stipend includes other benefits, such as higher education, room, and board.

Rules outlined by the U.S. Department of Labor exist surrounding how stipends can be used by companies and organizations. Stipends can not be used to hire students to replace existing staff, and the students are the primary beneficiary of the employment or training–not the company. Also, a stipend may be lower than the minimum wage as long as it's used to pay trainees.

Those earning stipends don't have taxes withdrawn to pay for Medicare and Social Security. However, the recipients need to set aside a portion of their earnings because stipends are considered taxable income. Stipends for interns typically range from $250 to $500 or more per month–although the pay can vary by employer.

Types of Stipends

Stipends are not hourly-based pay and are often used by employers as a lower-cost option to pay interns. The stipends can vary depending on the company or organization. Some companies pay stipends to help cover housing, food, or travel expenses. Below are just a few of the types of stipends typically offered.

Academic Research

Stipends may be offered to researchers at academic institutions or other organizations in order to aid them in focusing on their projects. Much like grants, these stipends may be furnished by third-parties who wish to see a particular study or form of research advance further without fiscal distractions that might otherwise hamper the researcher. Foundations and comparable entities might also offer stipends on similar terms, to support the work of researchers and the projects they are developing.

For example, the National Endowment for the Humanities offers grants in the form of stipends to support individuals conducting advance research that may be of interest to the general public or scholars. The types of research projects eligible to receive such a stipend can include books, translations, articles, digital publications, or site reports on archeologic digs. Criteria to receive such a stipend from the organization includes ensuring the project does more than collect data. Analysis and interpretation of the gathered information must be included.

Specific Expenses

Stipends might also be offered to cover very specific types of costs and expenses. For instance, students could receive a stipend that must be used towards the purchase or lease of computers during academic semesters.

Health Insurance

Health insurance stipends might be offered by employers to their workers in the form of extra money added to their paycheck to help them with health insurance costs.

Wellness Programs

An employer might also offer stipends for employees to cover gym memberships as part of a wellness program.

Job Training

Some companies offer their employees stipends for those who wish to take additional training and classes that may assist them with their jobs and career development.