NAU typically pays all students such as this through the payroll process.
I believe either way is allowable and probably OK from an administrative
perspective.  However, both stipends and wages are taxable to the student.
The student may not be aware of tax requirements and may not budget their
own resources accordingly.  As a result, the student may not have the funds
available at "tax time" to pay any amount which might be due.  Therefore,
we look at the payroll system as one more way to assist students rather
than as a needless intervention into their personal affairs.  Terry-

Terry A. May, Ph.D.                       Voice:    520-523-6788
  Director of Research Administration     FAX:      520-523-1075
  Office of Grant & Contract Services     INTERNET: xxxxxx@nau.edu
  100 Babbitt Admin. Ctr., Box 4130
  Northern Arizona University
  Flagstaff, AZ  86011-4130