What is a stipend? This might be a new term for all those who are just entering the world of internships and apprenticeships. You may have heard people talk that their paid internships offer them stipends, to earn along with learning and training in the field.
People prefer doing internships for their career development and to get experience in the field they are going to be working in. This blog is going to be all about what is a stipend and how it really works in the real world? Along with it we will be also looking at different types of stipends and what kind of internships may help you cover expenses.
If you’re someone who is an academic student or are someone who is looking for internships & doesn’t really know what is a stipend, then this blog is going to help you figure it out & will assist you from where you can get opportunities to get paid. So stick around to know more.
What Is A Stipend
A stipend is a fixed sum of money paid to students, researchers, apprentices, or interns, in exchange for their regular duties performed for a certain period of time. They are given to offset expenses like travel, food, accommodation, and so on.
To earn a stipend amount you need to do internships which are paid so that every month you earn little money to cover living expenses. But if you opt for an unpaid internship you won’t be receiving any kind of stipend as in exchange they compensate you with a certificate or any other benefits.
A stipend is not the same as a salary or a wage and it doesn’t give you a proper income like salaried employees. It is a less and fixed amount of money neither hourly wages nor regular pay. It may be paid weekly or monthly depending on the company you work for.
People do internships to learn and gain knowledge about the field they will be working in as a career. They are mostly focused on candidates’ training & development. Also, some companies also provide job offers if the student performed really well during the training period.
The benefits and stipend may vary according to the organization or institutions you are working for. Now as we got a clear idea of what is a stipend, let’s proceed further to its types.
Types Of Stipends
1. Volunteer Stipend
This involves when an individual offers services for any organization, NGO, or institution without taking any kind of pay it’s called volunteering. Usually, such types of jobs are unpaid, because an individual willingly gives their free services without any force or obligation.
But in some cases, you are paid not for your services but other expenses like your travel to some other place, accommodation, meals and so on. It has nothing to do with the services you perform but to assist you with your expenses so that you are able to successfully complete your tasks over there without any problems.
But after you are trained as a volunteer and have gained experience & skills you can work with the organization on a long-term basis if you want to get paid.
2. Health Insurance Stipend
Just like how an employee sometimes gets health insurance benefits from their employers, it can’t be possible for the interns. So what an employer does is they pay a little more money to the interns so that they get health insurance for themselves, or they can spend it for their living expenses as well, it totally depends on the interns. As they don’t have to prove anything to the employer whether they have taken a healthcare benefit or not.
3. Academic Research Stipend
The students who carry out research at any academic institution also receive a stipend, which can be to fund the research work or as a grant so that the researchers can do their research without any distractions.
4. Wellness Program Stipend
These funds are provided to the interns so that they can take care of their health and well-being. It can also be in the form of gym memberships, organizing wellness programs, and so on. This kind of stipend creates a positive impact on interns that the company they work for really cares for them and their well-being.
5. Pay For Tasks
If an employer gives you work that ain’t mentioned in your intern responsibilities then they can compensate you in the form of a stipend & pay for that specific task. For eg: if you are sent abroad for a conference, then they will pay your travel expenses and for the task, you did as well.
6. Living Expenses
In this, the company may provide you with a stipend to assist you with travel expenses, food, accommodation, and so on. For eg if an intern has to travel from one place to another then the institution or organization he/she works in will pay for it so that they don’t face any kind of issue during the training period.
7. Assist With Educational Expenses
Also known as fellowships, it’s basically when an institution or an organization accepts you as a candidate. They provide you with financial support for your education. So your stipend is not in the literal form of money but the institution or organization may pay your tuition fees or anything related to education.
Some employers may require you to do a job in exchange for this type of stipend. Some may just simply want you to complete your education & don’t require any kind of service in return.
It’s important to understand What is a stipend and its types in order to understand what you will be offered when you apply to an internship, apprenticeship, fellowship, and so on.
Some Unanswered Questions About What Is A Stipend
Is A Stipend Taxable Income?
Yes, the stipend is a taxable income in some cases, you have to keep aside a little amount to pay off your taxes at end of every year. As we saw above what is a stipend, it’s clear that it’s not a normal wage or a salary. So if your employer pays you as an intern he/she won’t be withholding taxes from your stipend but will pay you the whole amount.
You need to pay taxes of your own, they won’t be deducted from your stipend. If you work as an employee in the country your employer deducts the social security and Medicare taxes from your payment otherwise for interns there is nothing as such. Also if you are still unclear you can ask your employer about the tax implications of the stipend.
How Much Is A Stipend, Is It More Or Less?
As a salary cannot be paid to an intern, that’s why the employer pays you a stipend to aid basic expenses. The stipend given by the employer to you may vary depending on which organization you work for. As employees are paid more than minimum wage in the case of interns the stipend is a fixed amount that can cover the costs of basic expenses.
When Does An Employer Pay A Stipend?
A stipend can be paid monthly, weekly, or based on specific tasks. If you have applied for an unpaid internship, it won’t offer you any stipend in exchange for your services. So if you need a stipend you need to apply for those internships that offer you something in return like money or some benefits to aid your expenses.
What Is Tax Return Reporting In Case Of Stipends?
If you receive a fellowship or scholarship then it’s not considered taxable income, because this income is for expenses related to education, tuition fees, college equipment if needed by students, books, different supplies, and so on. If other than this it’s used for some other reasons then it can be a taxable income. You don’t really require to report these to the internal revenue service, but if there is a remaining amount then it is taxable.
If you are not really aware of tax returns then you should consult someone who has a good knowledge of taxes. A stipend in a tax return is mentioned in terms like taxable grant scholarship, non-qualified fellowship, or taxable scholarship. To file a tax return you can make use of any software, tax return apps, forms, and so on.
Difference Between Salary & Stipend
Let’s first get to know what is a stipend and then we will see how is it different from a salary.
The stipend is a specific cost paid to interns, trainees, or students to aid living expenses. It is not too much of an amount but it’s enough to pay off your expenses so that you can focus on your training or internship. It’s mostly focused on the career development and learning of the intern. A stipend is not something paid for your given services. Even if you perform really well still you won’t be paid any extra amount for it
Salary is an amount paid to an employee. It’s paid every month also can be weekly or commonly in some cases, also employees are eligible for overtime pay. The remuneration given to an employee is for the services they offer. The amount of salary is decided based on the market i.e how much one is getting paid for working in this field depending on their experiences. A salary is a taxable income so you need to pay. The increment is possible, depending on your performance it can be increased.
How Can You Earn A Stipend?
As the world is opening to more remote opportunities, you can even receive a stipend just by sitting at home and getting trained. Also, you can work on-site as well with companies so that you get the proper environment to work in. Many companies are welcoming students to apply to their company for various internships & apprenticeships.
The best way to gain some experience in the field you love is to start with a paid internship. It can be in any field like you can be a content writer, graphic designer, web developer, researcher, anchoring, marketing, sales, fashion designing, advertising, public relations & so on. Not just big companies give you stipends but also many startups have opened doors for new interns.
It’s a win-win situation for both the company as well as the student/intern. Because if they train a Candidate and they prove to be beneficial to the company then once they graduate they can turn them into their employee. And so it’s even a good thing for interns as well as they will get a job after they graduate.
Which Is Better A Paid Internship Or Unpaid One?
Yes, obviously when it comes to choosing between these two options many will go for paid internships because why not. But both of them have their own advantages & disadvantages. The first advantage of having a paid internship is that your expenses are taken care of and you can concentrate on your training and gaining experience.
A common advantage of both paid and unpaid internship is that it adds to your skills and experiences in your cv and resume. As we all know that in today’s world experienced candidates with the required skills are preferred. Whereas if you are doing an unpaid internship gives you an opportunity to explore what you really want to do.
Paid internships are a little too strict when it comes to schedules and training but in unpaid you are not that restricted. As we understood above what is a stipend and how it really works it’s clear that only paid internships provide you with stipends.
Websites To Find Internships Both Paid / Unpaid
- Global experiences
With this we come to an end of this blog, I hope you understood the concept of what is a stipend and how it works. If you’re looking for some internships you can check out the above-mentioned websites. Also, Google & LinkedIn are the best way to find out more about the company you want to work for, and also the social media networks as many employers sponsor ads for hiring people not just as interns but also for jobs.
Explore various fields, earn good & build your career. Thanks for reading.