Ameritech Financial on When Scholarships and Grants May Be Loans in Disguise

Scholarships and grants are the best ways to fund a college education. But sometimes that so-called free money turns into owed money if borrowers aren’t careful. While not all scholarships and grants come with conditions, some, like the federal TEACH grant, require certain behavior, and if the borrower doesn’t align with that behavior, the grant turns into a loan the borrower is responsible for repaying. Ameritech Financial, a document preparation company that helps federal student loan borrowers with federal repayment plan applications, urges students to read the fine print on all scholarships and grants and understand when they may turn into loans that may add an additional monthly financial burden.

“Grants are a college student’s best friend,” said Tom Knickerbocker, Executive Vice President of Ameritech Financial. “While most grants are simply free money, students should make sure that they aren’t signing up for something unexpected. And if they pursue grants that might turn into loans, it’s important that they do what they can to prevent that. Any amount of student loans can become a burden.”

While most grants are simply free money, students should make sure that they aren't signing up for something unexpected.

Tom Knickerbocker, Executive Vice President of Ameritech Financial

Some grants come from the state, funded by state taxes. Recently, lawmakers proposed a change to one such program, Louisiana’s TOPS program, to require students who drop out of school to be required to pay back the amount they had been awarded through the program. They argued that the bill would add accountability to students who may benefit from the college degree and it would potentially save the state money.

Other programs, such as New York’s Excelsior Scholarship program, have more lasting requirements. To remain eligible for an Excelsior scholarship, New York students must be residents of the state, complete the degree program in a reasonable amount of time, and commit to either two or four years of employment in the state depending on the degree program they completed. Borrowers who drop out, do not complete their program in time, or leave the state before their residency requirement has been fulfilled are required to pay back the scholarship as a loan.

When state-awarded scholarships such as these turn into loans, students must pay back the state. However, the federal TEACH grant program that provides grants to students planning to begin a teaching career comes from the federal government. Therefore, if students do not complete their obligation to teach in a high-need field at a qualifying public school for four years, their grant turns into a Direct loan and must be repaid just like other federal loans.

Borrowers with federal student loans who have trouble making their payments may consider looking into federal repayment options. Income-driven repayment plans (IDRs) can potentially reduce payments in relation to income and family size and can end in forgiveness after 20 to 25 years of enrollment in the program.

“It can be a cruel bait and switch to take a grant and see it turn into a loan,” said Knickerbocker. “For some, that new loan may add stress to an already stressful loan situation. At Ameritech Financial, we help federal borrowers understand and apply for IDRs that can potentially ease some of that stress.”

About Ameritech Financial

Ameritech Financial is a private company located in Rohnert Park, California. Ameritech Financial has already helped thousands of consumers with financial analysis and student loan document preparation to apply for federal student loan repayment programs offered through the Department of Education.

Ameritech Financial is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).

Ameritech Financial prides itself on its exceptional Customer Service.


To learn more about Ameritech Financial, please contact:

Ameritech Financial

5789 State Farm Drive #265

Rohnert Park, CA 94928


[email protected]

Source: Ameritech Financial


Tags: federal student loans, grants, income-driven repayment, scholarships

About Ameritech Financial

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Ameritech Financial is a document preparation company that helps borrowers enroll in the federal repayment program that matches their individual financial needs, potentially lowers payments and gets them on track for student loan forgiveness.