What Is a Stipend?

How this form of payment differs from an hourly wage

Apprentice and electrical engineer mentor in cable finishing factory
••• Monty Rakusen / Getty Images

A stipend is generally a fixed sum of money paid in addition to wages or salary. It is paid periodically to cover extra expenses you might incur.

Stipends are commonly used for interns that cannot afford the costs of commuting to work or traveling to and living in a different area for the internship. They can also be given for employees that have additional business expenses, temporary increases in responsibilities or other occasions related to training.

Stipend Uses

Stipends may be offered to encourage certain activities. For example, academic institutions may offer stipends that work like grants, to create incentives for researchers to further their work on certain projects. This could include book writing, articles, translating works, or interpreting and analyzing collected data.

Some schools offer stipends to help with specific expenses, such as a computer or other necessary equipment. These stipends may not be used to cover any other expenses. Some employers offer employees a stipend in addition to their regular pay, to cover some or all of the costs of health insurance, a gym membership, or continuing education for career development.

Some companies offer stipends to help an employee cover additional expenses such as meals for clients. Generally, a stipend is designed to be used for expenses related to travel, housing, and food.

Stipend Payments

Stipends aren’t performance-based or hours based. They are usually calculated based on policies put in place by schools, training programs or companies providing training to employees.

The range of stipend payments, or the total amount, can be broad. One school may offer $31,000 a year for doctoral students, while another offers $5,600 for an internship. A company may give an employee $1200 a month while on a three-month training program.

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 or should be eligible for a stipend, ask your employer 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 may receive stipends at the company's regular pay intervals or more frequently.

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.

Internships

The cost of housing for an internship also varies. Your interns might be paying up to $1200 per month to live in college dorms or rentals. Out-of-area students may need much more for living expenses over the summer.

Each intern's circumstances will be different. Generally, companies have determined a set amount for stipends based on the average cost of living for the area an intern will be working in. You may want to ensure any intern your company has is getting enough to live on while enrolled in your program or employed as an intern for your company.

Interns are your future employees, executives, and societal influencers. You should want to give them as good of an impression as you can while using them to create value for your business at the same time. Ensuring your interns are not struggling while under your wing is a good business practice.