Many of the terms used to describe payments made to University students are used inter-
changeably which makes for very confusing discussions.

Award:  Gift aid awarded based on any number of criteria , such as academics, achievement,
hobbies, talents, and affiliations with various groups, or career aspirations.  An award may be
won through a contest if the following conditions apply:

  • The amount won must be used for educational expenses,
  • The winner has to be a Ball State student, and
  • The contest is related to the student's coursework, studies or degree completion.

Prize:  Payment won in a contest that does not have to be used for educational expenses.  
Prizes may include cash, gift cards, tangible personal property, or complimentary services.  
Prize recipients are not required to be students and the contest is not required to relate to
student's coursework, studies or degree completion.

Other categories include Grants and Scholarships which must be reported to the Office of
Financial Aid and Scholarships. If a payment is not an award to be reported by the Office of
Scholarships and Financial Aid and is, instead, a service-based payment or prize, the amount
is reportable income to the student. The method of reporting such income is determined by
the student’s employment status with the University.

  • Student employee:
    A payment for services made to a student employee is treated as compensation
    subject to all applicable payroll taxes and withholding regardless of its purpose. Each 
    payment will be added with the student’s other wages and reported on a Form W‐2 at
    the end of the calendar year.  A prize won by a student employee is treated as
    compensation subject to all applicable payroll taxes and withholding. The value of any
    prize won by a student will be added with the student’s other wages and reported on
    a Form W‐2 at the end of the calendar year. The value of the prize is reported by the
    originator of the prize on the Cash Payments/Prize Form. The form must be signed
    by the recipient indicating their understanding of the taxable nature of the
    prize
    .
  • Non‐employee student:
    A payment for services to a student who is not an employee of the University is still
    treated as taxable income, but must be paid via the Accounting Office. Each amount paid
    to a non‐employee student will be reportable on a Form 1099‐MISC at the end of each
    calendar year, if required.
    A prize won by a student who is not an employee of the University is still treated as
    taxable income. The value of a prize is reported by the originator of the prize to the
    Accounting Office on the Cash Payments/Prize Form. The form must be signed by
    the recipient indicating their understanding of the taxable nature of the prize
    .

Complete information regarding this policy and related forms, can be found on the Website of
the University Controller: