FAQ about Financial Aid for Students
Q.How is financial aid awarded?
A. It’s awarded by financial need (need-based aid) or on academic achievement, athletics, or other talents (merit-based aid). Most financial aid is need-based but is often awarded in combination with merit-based awards.
Q.Who gives financial aid?
A.Schools, state and federal governments, and private businesses and organizations provide financial aid. But you and your family must pay as much as you can towards your school expenses.
Q.Who develops the financial aid process?
A.Generally, your school’s financial aid office develops your financial aid package based on guidelines and law. The package is typically a combination of grants, scholarships, work-study, and/or loans and depends on what funds are available.
Q.Where can I get financial aid information?
A.Free financial aid information can come from your guidance counselor, the financial aid officer of the school(s) you’re interested in attending, and this Web site.
Q.How do I apply?
A.If you’re going to a public or private Kentucky college, university, technical college, or trade school, you must file the Free Application for Student Financial Aid (FAFSA) to be considered for an award from the following major state and federal student financial aid programs: CAP and KTG Grants, Federal Stafford Loan, Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan.
If you have any questions or need help completing the FAFSA or to find out if other application forms are required, check with the financial aid office at the school you plan to attend. Read the instructions on all forms carefully and follow them to the letter.
Q.When do I apply?
A.As soon as possible! The first thing you must do is make sure the FAFSA is filled out. This is done using the previous year’s tax data. The earlier you file after January 1, the better your chance of getting financial aid. Be sure and check with the financial aid offices of the schools you’re interested in to find out their deadlines.
Q.What is need analysis and how is it determined?
A.Need analysis is used to determine if you have need for aid, and if so, how much. This is determined by subtracting your expected family contribution (EFC) from the total cost of attendance.
Q.What is the EFC and how is it figured?
A.The EFC is figured from the information on the FAFSA using a formula set by Congress. The result is the amount you and your family are expected to pay toward your college costs. If you are considered an independent student, the EFC is figured on your own financial resources (and those of your spouse, if you’re married).
Q.What if I don’t qualify for financial aid this year?
A.Reapply each year you plan to attend. Your family’s financial situation and the criteria for eligibility change each year. Just because you didn’t qualify this year doesn’t mean you automatically won’t next year.
Q.What is “satisfactory academic progress” mentioned in the eligibility criteria of some financial aid programs?
A.School and federal regulations determine the eligibility criteria. To continue receiving aid under these programs, you must make satisfactory academic progress according to your school’s policy. Check with the schools you’re interested in to find out exactly what the requirements are.
Q.Who coordinates the financial aid process?
A.This is almost always done by financial aid offices. Check with them to see what you qualify for and what kind of financial aid package they can offer you.
Q.What does financial aid cover?
A.Financial aid must be used to pay the costs of education, which may include tuition, fees, housing, food, books, supplies, transportation, and personal costs.
Q.How much can I get?
A.The total amount of need-based financial aid can’t exceed the school’s total cost of education minus the EFC.
Q.When will I know how much I will get?
A.If you apply for state and federal aid between January and April, you should be notified of your award(s) during the late spring or early summer.
Q.Is there anything I can do to find more financial aid?
A.There certainly are, such as these:
Check your high school or public library for books about sources of student aid.
Make good grades in high school. By doing so, you can earn money for college or technical training through the KEES program. Students who make a 2.5 or higher grade point average can earn scholarships for college. Doing well will also help you qualify for other scholarships and grants.
Learn about student loans. You should first try for aid that you don’t have to repay. However, most students will have to take out loans to pay for college. If you’re going to need student loans, you need to make sure you get the least expensive ones you can. That means you need to learn some terms and then make comparisons.
Talk with the financial aid administrator at the school you’re interested in attending. He or she can inform you about aid programs that are available through the school.
Search for free information about scholarships and other student aid sources.
Check with community organizations and civic groups such as the American Legion, YMCA, 4-H Club, Kiwanis, Jaycees, Chamber of Commerce, and Girl or Boy Scouts. Foundations, religious organizations, fraternities or sororities, and town or city clubs are some other possible sources of aid.
Check with professional organizations such as the American Medical Association or the American Bar Association) to see if they have financial aid available. Use the Web or an association directory to get addresses to write for more information.
Watch newspapers for scholarships offered through local community service organizations, businesses, clubs, unions, churches, fraternal groups, etc., and contact them for more information.
Q.What are Federal Family Education Loans and Federal Direct Loans?
A.Federal Family Education Loans are made by lending institutions and generally insured by state or private, nonprofit entities. Your loan application is certified and your loan disbursed through the school.
Federal Direct Loans are financed by the U.S. Department of Education using funds it borrows from the U.S. Treasury. The program is administered by the school.
Check with the school you plan to attend to see which type of loan is available to you.
Most financial aid packages prepared by schools contain student loans. These loans have low interest rates and long-term repayment options. Lenders may also offer discounted fees and interest rates. Check with your lender to determine applicable fees.
Q.What is the school’s refund policy?
A.Every school that awards federal student aid must have a written refund policy and give you a copy of that policy if you request it. It’s important to find out (before you apply for admission) if you can get a refund if you withdraw from school before you get your degree or certificate.
Q.Are scholarships taxable ?
A.If you attend college on scholarships, you or your parents should double-check the tax status of any financial aid with a tax advisor before deciding whether to ignore the income or report any of it on the tax return. The basic requirement for a scholarship to be tax free, known as a “qualified” scholarship, is that the recipient be a candidate for a degree.
A qualified scholarship is any amount used for tuition and required fees, books, supplies, and equipment. Any amount received for incidental expenses is not a tax-free, qualified scholarship. Incidental expenses include expenses for room and board, travel, research, and clerical help.
For more information, call the Internal Revenue Service (IRS) at (800) 829-1040 or visit www.irs.gov to download the free Publication Scholarships and Fellowships. This and other free publications are also available from the IRS by calling (800) 829-3676
Q.What about tax credits and deductions?
A.Here are four ways you can save money on your taxes when it comes to paying for college. For all these credits and deductions, you or your parents should talk with your tax advisor.
If your parents paid qualified tuition and fees for themselves or a dependent, they may be able to deduct up to $3,000 on their federal income tax return. This deduction is taken as an adjustment to income, which means your parents can claim it even if they do not itemize deductions. For more information, see IRS Publication.
The Hope Tax Credit can reduce the federal income tax you or your parents owe. It’s available for (1) college students pursuing an undergraduate degree and financing their own education and (2) parents or other adults who are paying for children to go to college or a vocational school and claiming them as a dependent on their federal tax return. It can only be taken the first two years a student is in college.
Taxpayers can deduct up to $1,500 of qualified tuition and related expenses. Payments made during a calendar year qualify for the tax year. There is no limit to the number of students in the family who can qualify. The credit is deducted from the amount of federal income tax you or your parents owe.
For Hope benefits, taxpayers must submit IRS Form 8863 with their federal tax returns. For more information, call the IRS Help Line at (800) 829-1040, read IRS Publication 970
If you or your parents made payments on any student loans this year, you may be able to claim up to $2,500 in interest as a deduction to income. For more information, call the IRS Help Line at (800) 829-1040, read IRS Publication 970 .