@NotLearnedHand - the "self employment" tax represents the Social Security and Medicare tax. It is no different that what a W-2 employee has withheld for services rendered with their employer.
As you describe the payment as a compensation payment for services, and not a scholarship, why is it not subject to Social Security and Medicare tax, no different than any other American worker who pays their fair share of Social Security and Medicare tax for worked rendered?
You further state that
"It is clear from this that the IRS expects that some students will receive 1099-NEC for this income but does not expect them to report it on schedule C."
Can you please post that link as it is not clear to me from your post where the IRS expects 1099-NEC income not to be reported on a Schedule C in this circumstance.
The link you do post is specific to scholarship and grants (which are normally reported on 1098-T forms and do end up reported as wages with the 'sch' designation). You acknowlege in your original post that this is income for services rendered and not a scholarship and grant. So i am not following the logic flow.
thanks
