Types of Financial Aid
Awards based on need that do not need to be repaid. The main grant programs are the Federal Pell Grant (Pell), Federal Supplemental Educational Opportunity Grant (FSEOG), College Access Program (CAP) Grant, and Kentucky Tuition Grant (KTG). Pell and FSEOG are, as their names indicate, federal programs. CAP and KTG are state programs administered by KHEAA. Many schools also have grants available.
Awards based on some kind of special achievement, either academic, athletic, or service. These are merit-based and do not need to be repaid. The Kentucky Educational Excellence Scholarship (KEES) is the major state scholarship. Many schools and local organizations also provide scholarships.
- Scholarship scams: Student financial aid involves billions of dollars. And where there's that much money, there are lots of people who will try to make money of unwary students and parents.
Don't fall prey to a con artist
Most information about scholarships you may qualify for is available for free on the Internet, from your guidance counselor, or the financial aid office of the college you plan to attend. Be careful about spending any money trying to track down sources of college financial aid.
- Scholarship search companies may charge hundreds, even thousands of dollars to give you a list of scholarships. That's money better spent paying for college. With a little detective work, you can find financial aid sources yourself.
Your guidance counselor should have a copy of Affording Higher Education, a KHEAA publication that lists over 3,200 scholarship sources for Kentucky students. After talking with your counselor, contact the financial aid office of each college you're interested in to discuss financial aid programs.
You should also attend any free financial aid workshops sponsored by your high school, local colleges and universities, or the Kentucky Association of Student Financial Aid Administrators (KASFAA), such as College Goal Sunday. Don't confuse free events with events sponsored by companies offering services for a fee.
The Internet can also be a valuable resource tool for free scholarship sources, but beware of sites that ask for a credit card number.
Remember: Web sites are not regulated by anyone. A scam artist can set up a great-looking site, rake in money, and then shut down.
The Federal Trade Commission cautions students to be especially skeptical about scholarship search companies and Web sites that claim:
"The scholarship is guaranteed or your money back."
Read the fine print. To get a refund, you may have to receive a letter of rejection from every source on your list. That may be impossible to do if a scholarship on your list is no longer offered. Some companies have even been accused of providing fake sources to make sure you can't get a rejection letter. The fine print may state that all types of student financial aid are included, so if you get a loan but no scholarships, you can't get your money back.
"You can't get this information anywhere else."
Nearly all the information can be found by working with your guidance counselor and college financial aid officer, visiting your high school or public library, or doing your own free online scholarship search.
"I just need your credit card or bank account number to hold this scholarship."
Never give these numbers to a person or company you're not sure about. Someone with your credit card number can charge something to your card, and someone with your bank account number can make withdrawals - without your knowledge.
Part-time employment that lets a student earn money toward a college education either on or off campus. This can be through the Federal Work-Study Program, the KHEAA Work-Study Program, or a college's work-study program.
Check with your school's student employment office to see if they offer their own work-study program.
Money borrowed, either from a bank, the government, or a school. A student loan must be repaid. However, low interest rates are available, and repayment doesn't start until you've either left school or graduated. The major loan programs are Federal Perkins Loans, Federal Stafford Loans and Federal PLUS Loans (for parents). In addition, some schools have their own loan programs, and some lenders offer alternative, or private, loans, such as the Kentucky Advantage Loan from The Student Loan People.
- Glossary of technical terms: About two-thirds of all students who get a higher education will have to take out student loans, which means you need to know student loan terms. These definitions will help.
Most students will need a student loan, so it's wise to know what all the terms mean and how they apply to you. Terms that are used in a definition but are defined in this section are indicated in blue.
Borrower benefits - Think of these in terms of a price break you get when you buy something or a rebate you get after you buy it. A lender can charge an origination fee, while a guarantor must charge a federal default fee. Not all lenders and guarantors charge the same fees. These fees are deducted before you see the money, so the lower the fees, the more money you receive to pay for your education.
You can also get breaks when you start repaying your loan. Many lenders will charge you a lower interest rate if you follow certain criteria.
Federal default fee - The guarantor must charge you up to 1 percent of your loan as a default fee. Some lenders will pay this fee for you.
Guarantor - The guarantor has a contract with the lender to pay off a student loan under special circumstances.
Interest - This is the money you pay the lender for letting you use its money to pay your school costs.
Lender - The lender is whoever loans you the money. It can be a bank, a nonprofit state corporation, a credit union, or some other financial institution.
Origination fee - This helps cover the costs the lender has to pay for doing business with you. Lenders can charge up to a 1 percent origination fee.
Principal - This is the actual amount you borrow before the origination fee and federal default fee are deducted. The interest you are charged will be based on the principal.
- Managing your student loan: After you've finished your higher education, you have to pay back any student loans you received. If you don't you can get into a lot of trouble. Here's advice on how to keep out of trouble - or what to do if you're already in trouble.
Scholarships that require you to provide certain services for a period of time. If you don't, you have to repay the money with interest. In Kentucky, these include the KHEAA Teacher Scholarship and the Osteopathic Medicine Scholarship.
Arrangements offered by some schools to eliminate certain costs for students who meet certain qualifications. These include waivers for dependents of deceased or disabled veterans, for foster children, and for senior citizens.
Financial assistance offered to individuals (or their dependents) who either were or are going to be in the U.S. Armed Forces.
A contract guaranteeing fully paid tuition for a fixed number of credit hours at a participating school. You have to pay a certain amount up front. Kentucky's Affordable Prepaid Tuition (KAPT) is such a program. Kentucky also has a college-savings program, the Kentucky Education Savings Plan Trust (KESPT). KAPT and KESPT are administered by KHEAA.