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Stipend | Meaning and Definition

What is a stipend?

A stipend is actually a set amount of money given or paid on either a routine basis for work or to cover expenditures, such as a grant, apprenticeship, or traineeship. It is usually granted to interns as well as to the trainees who are not actually permanent members of the company. It is usually a small amount, just about enough to cover some of the interns’ and trainees’ expenditures.

Employers utilize this amount as a low-cost option for paying interns because they are not based on hourly labor. Interns, as well as trainees, get significant experience and information while working for the organization. Given the high cost of training at institutes, most people choose internships based on the stipend.

What is the stipend for an internship? 

Some graduate institutions offer this amount to help students balance their time and finances while pursuing their academic goals. To reflect complementing benefits, universities commonly refer to the amount paid to grad students as a stipend instead of wages. Interns gain free education and experience, while the organization gains new talent and hands-on assistance. It can also be used to reward students at non-profit organizations, but they should not be used to reward volunteers because they may be required to be recorded as workers and so subject to taxation on the stipend. This is a one-time stipend that usually lasts shorter than a year.

Stipend Rules

Here are few rules to how stipend works in an organization:

1. Uses

The most common use of this is to cover the basic costs of travelling, food and some of the small expenses of the intern. It offers students to carry out their education side by side learning some practical skills.

2. Minimum Amount

As such there is no regulation for the amount of stipend paid to a trainee but this amount is generally low as the trainee is getting equal amount of knowledge for the work done. Even some internships are also unpaid and no amount is paid for that.

3. Tax withholding

It doesn’t count under the wages as it is the amount that is provided only to cover your some basic expenses. You can ask a tax expert to know if your internship amount is taxable or not.

4. Negotiations

A trainee can also negotiate for the amount of paid to them with their employer. If the trainee feels that amount is very less to cover his basic expenses they can negotiate with the employer.

FAQs (Frequently Asked Questions)

Stipends are fixed amount paid to cover basic expenses such as food expenses, travel expenses etc.

The amount of stipend is usually lower than salary for the similar work.

Another term used for stipend is allowance, fee, salary etc.

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