What Is a Stipend?

Definition & Examples of a Stipend

Apprentice and electrical engineer mentor in cable finishing factory
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A stipend is a sum of money paid to someone to help offset costs. It's typically provided to someone who is in training, such as an intern.

Learn more about stipends and who might be expected to receive one.

What Is a Stipend?

A stipend is a fixed amount of money intended to provide financial support to a person, particularly to help cover living expenses. It is not the same as a wage or salary supplied to an employee, because it isn't performance-based or hours-based.

Stipends aren't intended to replace regular wages, and therefore their amounts may be quite low—just enough to cover certain costs. Generally, a stipend is designed to be used for expenses related to travel, housing, and food.

How Stipends Work

Stipends are usually predetermined, fixed amounts, and listed in policies put in place by schools, training programs, or companies providing training to employees. They may be paid periodically, such as weekly or monthly, or in a lump sum.

Who Receives a Stipend

Generally, stipends are paid for the following:

  • Research
  • Training
  • Fellowships
  • Wellness expenses
  • Clergy

Therefore, you'll often see interns, apprentices, and trainees receive a stipend to cover living expenses while they are in training. Clergy may receive a stipend so that they don't have to take on an additional job to cover their costs.

What Stipends Are Used For

Sometimes, stipends also may be offered to encourage certain activities. For instance, academic institutions may offer stipends that work like grants, to create incentives for researchers to further their work on certain projects, such as writing books and scholarly articles, translating works, or interpreting and analyzing collected data.

Some schools offer stipends to help with specific added expenses, such as a computer or other necessary equipment. Similarly, some employers offer employees a stipend in addition to their regular pay, to cover some or all of the costs of specific things such as health insurance, a gym membership, or continuing education for career development. Sometimes companies offer stipends to help an employee cover business expenses such as meals for clients.

If employers plan to offer interns a stipend instead of an hourly wage, they should include that information on the advertisement for the internship and reiterate it during the interview.

If you believe you might be eligible for a stipend, ask your organization if you are able to receive one, and ensure you are given a written agreement acknowledging the stipend and when it will be paid.

You should inquire how a company's stipend pay process will work so that you can plan around the payments if you need to. You may want to inquire about the conditions under which a stipend would not be paid to ensure you do not do anything to jeopardize payment.

How Much Is a Stipend?

There is no set amount for a stipend, and the amount varies depending on what it is for. A stipend for an intern could be $500 a month, or it might be enough to cover rent and food, too. A university might offer a yearly stipend of $30,000 for doctoral students; a private company might offer its employees a $75 monthly stipend for a mobile phone.

Since a stipend isn't the same as a salary, it isn't required to meet minimum wage standards.

Companies can determine a stipend amount at their discretion—as long as the recipient is properly classified as a trainee or intern, not as a regular employee. If they're a regular employee, they must be paid at least minimum wage and may be eligible for overtime pay if they work more than 40 hours in a week.

However, a stipend may be considered taxable income, so the recipient should take care to record it carefully and claim it on their taxes if necessary. A tax professional can help you determine whether a stipend is taxable; the Internal Revenue Service (IRS) also has a tool to help determine whether the money you received is considered taxable income.

Key Takeaways

  • A stipend is a fixed payment intended to help offset costs.
  • A stipend might be paid to interns, trainees, or apprentices to help them with living expenses as they are learning.
  • Employers may pay stipends to help defray certain extra costs such as gym memberships.
  • Stipends are generally considered taxable income.