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KAPT
Kentucky's Affordable Prepaid Tuition

KAPT enrollment is currently closed.
Check back regularly for the dates of the next enrollment period.

Call toll-free 1-888-919-KAPT.

In addition to KAPT, Kentucky sponsors the Kentucky Education Savings Plan Trust (KESPT).   Both KAPT and KESPT are administered by the Kentucky Higher Education Assistance Authority. If you would like the information on KESPT, call 1-877-KY-TRUST, or visit www.kysaves.com.

PO Box 798 • Frankfort, KY 40602-0798 • 1-888-919-KAPT (toll-free)
Copyright 2002-2004 Kentucky's Affordable Prepaid Tuition

KAPT Program Overview

Welcome to the KAPT Program Overview.

Please note that the program overview provided here is for the Fall 2004 enrollment period. The program overview will be updated for the next enrollment period.

We have provided the overview material in two formats-- HTML and PDF. To view the PDF version, you will need to have the free Adobe Acrobat Reader installed on your system.

If you would like to receive the KAPT enrollment kit by mail, which includes the KAPT program booklet, please call 1-888-919-KAPT and press option 1.

KAPT At A Glance

Fact Sheet
KAPTivating Facts About Kentucky's Affordable Prepaid Tuition

Keeps Options Open
KAPT purchasers can choose from three different plans:

• The Value Plan guarantees tuition at most of Kentucky’s community and technical colleges.
• The Standard Plan guarantees tuition at Kentucky’s 4-year public universities.
• The Premium Plan aims to cover the average price of tuition at Kentucky’s private colleges and universities.

All three KAPT plans can be used at any qualified institution of higher education, public or private, anywhere in the country. Purchasers can also change plans any time a need arises until the beneficiary begins to use benefits.

A refund is issued with no penalties if a student receives a scholarship, dies, or becomes disabled and cannot attend school.

Affordable
KAPT lets families cap college inflation rates by offering the cost of tomorrow’s tuition at lower prices today.

Parents, grandparents, or other account hold ers can prepay tuition in one lump sum or in manageable monthly payments over many years until the student begins school.

Tax Free
KAPT investment earnings are exempt from state and federal income taxes.* Excess funds can be used tax-free towards other qualified higher education expenses such as room, board, and books.

Benefits can also be used at private Kentucky colleges and universities as well as colleges and universities nationwide. Benefits can be transferred among siblings, cousins, and other eligible family members with no penalties.

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History
How It All Began

The history of Kentucky’s Affordable Prepaid Tuition (KAPT) is a bright example of how bipartisanship and forward-looking policy development can bring outstanding government programs to the public.

In 1999, Jonathan Miller (D-Lexington) built his campaign for Kentucky State Treasurer around the theme of bringing to Kentucky a prepaid college tuition savings plan. Nineteen other states already had these plans, which help make it easier for families to afford college by guaranteeing the cost of tomorrow’s tuition at lower prices today. Upon his election, Treasurer Miller petitioned the Kentucky state legislature during its regular session in 2000 to pass enabling legislation. In January, State Representative Rocky Adkins (D-Sandy Hook) introduced House Bill 180 to bring the state a prepaid tuition plan. Under Rep. Adkins’ leadership, more than 60 members of the 100-member House of Representatives signed on as original co-sponsors. House Bill 180 passed through two House committees and the House floor, all with unanimous votes.

After reaching the Senate, Senate Education Committee Chairman Lindy Casebier (R-Louisville) spearheaded the effort to pass House Bill 180, and was helped significantly by Senator Bob Jackson (D-Murray). Again, the legislation passed two Senate committees and the Senate floor without a single negative vote.

On March 28, 2000, the legislation was signed into law by Governor Paul Patton (D-Pikeville), whose commitment to educating Kentucky’s young people was the hallmark of his administration.

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Detailed Questions and Answers about KAPT

How KAPT Works: The KAPT Guarantee

How does KAPT work?
KAPT guarantees the price of tomorrow’s tuition at lower prices today. There are three plans.

THE VALUE PLAN–Guarantees the price of in-state tuition and mandatory fees at almost every Kentucky Community and Technical College System (KCTCS) college. Participants prepay the cost of KCTCS tuition through a lump- sum or monthly payment plan. Tomorrow’s KCTCS tuition price for full-time enrollment will be guaranteed up to 16 hours per semester. If the child attends a more expensive school that is not in the Value Plan, the family will have to make up the difference.

THE STANDARD PLAN– Guarantees the price of in-state undergraduate tuition and mandatory fees at Kentucky’s eight public universities. Participants prepay the cost of tuition at Kentucky’s most expensive public university through a lump-sum or monthly payment plan. This plan will guarantee tomorrow’s tuition price for full-time enrollment, up to 16 hours per semester, at the state’s most expensive public university. If a child attends a less expensive school—for instance, a community college or one of the less expensive four-year regional universities—the difference can be applied to qualified higher education expenses such as room, board, and books. If the child attends a more expensive school not in the Standard Plan, the family will have to make up the difference.

What is KAPT’s guarantee?
Kentucky law provides that your KAPT contract constitutes an irrevocable pledge and guarantee by the Fund to pay tuition of a qualified beneficiary in accordance with your purchased tuition plan and your Master Agreement. You should also be aware of the following. First, payment of the tuition guarantee is contingent upon the Fund consistently meeting its investment targets. Your KAPT contract is not backed by the full faith and credit of the Commonwealth of Kentucky; this means that the General Fund of the Commonwealth is not obligated to fund any KAPT tuition liabilities. However, under current law, 75 percent of the State Treasurer’s Unclaimed Property Fund (currently $80 million), may be used to fund any KAPT shortfalls.

How can KAPT make this guarantee?
The KAPT Trust Fund, into which payments are made, seeks to produce a return that is equal or greater than college tuition inflation. Should the investments produce a smaller return, the Trust Fund is backed by 75 percent of the State Treasurer’s Unclaimed Property Fund. While this legislative guarantee could be removed by the Kentucky General Assembly, such an action would affect only subsequent contracts—not contracts entered into during the fall 2004 enrollment period or prior enrollment periods. The Kentucky Constitution prohibits the legislature from impairing contracts made between the state and any individual, such as the KAPT Master Contract Agreement.

For additional information, please see the Reports section on this website to download KAPT’s latest financial statements, actuarial report, and investment performance.

Is KAPT guaranteed by the Commonwealth of Kentucky?
KAPT does not have a constitutional full faith and credit backing of the Commonwealth of Kentucky, meaning the Kentucky General Fund is not mandated to fund KAPT in the event the KAPT Trust Fund and the State Treasurer’s Unclaimed Property Fund are not sufficient to pay KAPT contract obligations. However, KAPT does have a statutory guarantee, and in the unlikely event KAPT experiences a shortfall, the Kentucky General Assembly could authorize additional funding.

Please keep in mind that KAPT’s guarantee only becomes effective upon your full payment of all contractual obligations and enrollment by your KAPT beneficiary. Entering into a KAPT contract establishes a legal obligation of the Fund to pay tuition only if you meet those requirements.

Is there an individual account set up for my money?
The program is not an individual savings account. It is a trust fund that combines the contributions of all participants in order to maximize benefits from institutional investment activities. KAPT does maintain separate accounting records for each participant and his or her contributions for the purpose of calculating refunds, reporting to the Internal Revenue Service, and administering payments when a student enters college. Purchasers will receive annual account statements reflecting contributions, distributions, and other financial data relating to their KAPT contract. You can also access your account information online at www.get kapt.com.

How is KAPT different from traditional private investments?
The value of your KAPT account is strictly tied to increases in college tuition and does not depend on the whims of the stock market. Second, KAPT investment earnings are exempt from state and federal taxes, unlike many other types of investments.

Who manages the money I pay into KAPT?
The Fund is governed by the KAPT Board of Directors whose members include state officials and other Kentucky citizens with a range of financial, business, and legal expertise. KAPT investments are professionally managed by an independent investment manager under the oversight of the Board. Funds are managed consistent with prudent investment strategies, which are defined and monitored by a nationally-recognized investment consulting firm.

The Kentucky Higher Education Assistance Authority, the state agency that administers loan, grant, scholarship, work-study, and savings programs for higher education, administers KAPT’s daily operations under the governance of the KAPT Board of Directors.

How do I purchase a contract?
To purchase a contract, complete the on-line application on this website or download the application and return it along with your non-refundable $50 application fee by the deadline marked on the application form. Children under one year old can be enrolled year round. After paying the $50 application fee for their first application, families receive a discounted application fee of $25 for each additional application submitted in the fall 2004 enrollment period.

Will I receive an official document outlining the terms and
conditions of my KAPT contract?
Included on this website are copies of the Fall 2004 Master Agreement and Disclosure Statement. KAPT encourages you to read these documents before submitting an application. After your application is processed, you will receive a Welcome Kit containing a Terms and Conditions of Payment and Purchase document. Your Terms and Conditions of Payment and Purchase, the Master Agreement, KAPT regulations, applicable state and federal law, and your application make up your KAPT contract.

Will KAPT be offered again in the future?
KAPT may or may not have future enrollment periods. Factors, including the actuarial status of the fund, tuition increases, and investment returns, will be reviewed annually by the KAPT Board of Directors in making decisions about future enrollments. KAPT contracts already purchased will not be affected by future enrollment periods.

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Eligibility and Use of Benefits

Who is eligible to open a KAPT account?
Anyone interested in the welfare and education of a beneficiary (parents, grandparents, friends, loved ones, or even trust foundations and corporate
entities) can open a KAPT account. They can contribute to KAPT whether they live in Kentucky or in another state.

May two people jointly purchase a contract?
Although many people may contribute to a single KAPT account, only one purchaser is allowed. That person is the owner of the contract, but the purchaser can also appoint a successor-in-interest on the application form who can receive contract information and assume contract rights upon the death of the purchaser.

Once I open a KAPT account, how long is it before the beneficiary
can begin using benefits?
KAPT requires a two-year waiting period before benefits can be used, even if the account is paid in full initially with a lump sum. Payment of benefits cannot begin prior to the second anniversary of the first payment due date of the agreement. Accounts must be paid in full before benefits can be used.

My child is a junior in high school this year. Does this mean I
can’t open a KAPT account?
Although the two-year waiting period still applies, this does not prevent you from opening a KAPT account. Persons who open accounts during the fall 2004 enrollment won’t be able to use KAPT benefits until the fall of 2007. Therefore, your high school junior would not be able to use KAPT benefits until her sophomore year in college. But you could still purchase tuition for her sophomore, junior, and senior years, for example. Keep in mind that all accounts must be paid in full before use of the benefits can begin.

What expenses can be paid with KAPT funds?
Qualified higher education expenses are tuition and fees, books, supplies, and equipment required for enrollment and room and board if the beneficiary is enrolled at least half-time.

Does the purchase of a KAPT contract guarantee student admission to a college or university or in-state tuition rates?
No. Students must meet the admission requirements of the school they wish to attend. The determination by a particular state institution as to whether a student is eligible for in-state tuition rates is completely independent from the ownership of a KAPT contract.

When my beneficiary attends college, how will KAPT make payments?
In general, KAPT will send funds directly to the higher education institution at the beginning of each semester at the direction of the account purchaser. When the projected college entrance year is reached, KAPT will provide information and forms regarding tuition payments. For more information on the KAPT payout process, see the Using Benefits section.

For example, the Standard Plan payout value is equal to the highest-priced Kentucky public university tuition and mandatory fees. If the University of Kentucky has the highest-priced tuition and mandatory fees for the year at $5,000 per semester, the payout value for one contract year of the Standard Plan for that academic year will be $10,000 or $312.50 per KAPT benefit hour. If you own four years of the Standard Plan, your one-year payout value will be $10,000 and your full account payout value will be $40,000 at that time.

For more information on using KAPT benefits, see the Using Benefits section.

How will KAPT affect a student’s eligibility for financial aid?
Any investments or savings are likely to affect financial aid eligibility. In addition, there is uncertainty as to how much and what type of financial aid will be available to families in future years. For federal need-based financial aid, the receipt of KAPT contract benefits may affect a beneficiary’s eligibility for some amount of financial aid as the contract benefits are currently treated as a financial resource of the beneficiary. Your contract benefits are not included in determining the amount of Kentucky state student aid your beneficiary will receive, and your contract benefits should not affect the beneficiary’s receipt of merit-based financial aid such as academic or athletic scholarships. The best resource for more detailed information is the financial aid office of your local college or university.

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A Guide to Public Colleges, Universities, and Technical Colleges Eligible for KAPT's Guarantee
The following is a list of Kentucky public colleges, universities, and technical colleges that are eligible for the KAPT guarantees provided under the Value and Standard Plans. Benefits from Kentucky’s Affordable Prepaid Tuition can by used at ANY qualified institution of higher education, public or private, anywhere in the country.

The Value Plan Guarantee: Kentucky Two-Year Community and Technical Colleges
KAPT’s Value Plan includes a guarantee of tuition* at the following Kentucky Community and Technical College System (KCTCS) institutions:
Ashland Community and Technical College
Big Sandy Community and Technical College
Bowling Green Technical College
Central Kentucky Technical College
Elizabethtown Community and Technical College
Gateway Community and Technical College
Hazard Community and Technical College
Henderson Community College
Hopkinsville Community College
Jefferson Community and Technical College
Madisonville Community College
Maysville Community and Technical College
Owensboro Community and Technical College
Somerset Community College
Southeast Kentucky Community and Technical College
West Kentucky Community and Technical College

NOTE: Lexington Community College (LCC) is not included in the Value Plan guarantee because LCC has a different tuition and fees pricing structure from the other KCTCS institutions. Value Plan contract benefits can be used at LCC or any other qualified higher education institution.

*The Value Plan payout value is based on a maximum of 16 hours per semester at KCTCS.

The Standard Plan Guarantee: Kentucky Four-Year Public Universities
KAPT’s Standard Plan includes a guarantee of in-state undergraduate tuition* at the following schools:

EVERY community and technical college listed in the Value Plan
Eastern Kentucky University
Kentucky State University
Lexington Community College (two-year public college)
Morehead State University
Murray State University
Northern Kentucky University
University of Kentucky
University of Louisville
Western Kentucky University

*The Standard Plan payout value is based on a maximum of 16 hours per semester at the highest-priced Kentucky public university.

REMEMBER: ALL THREE KAPT PLANS CAN BE USED AT ANY QUALIFIED INSTITUTION OF HIGHER EDUCATION, PUBLIC OR PRIVATE, ANYWHERE IN THE COUNTRY.

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Flexibility

What if I don’t know which school my beneficiary will want to attend?
That’s not a problem. If, for example, you pay for the Standard Plan in anticipation that the student will attend a four-year public university, but the student later decides to attend a Kentucky community college, the difference between the tuition of the four-year university and the tuition at the community college can be used to pay for books and other qualified higher education expenses.

Can more than one account be opened for the same beneficiary?
Yes. For example, if you anticipate your beneficiary may want to attend a community college and a public university, you may want to open a two-year Value Plan and a two-year Standard Plan. Also, other family members and friends can open KAPT accounts for your beneficiary as long as the total years of tuition purchased does not exceed the five-year maximum.

What if a student decides to attend a higher education institution that is not included in the tuition plan purchased?
The value of your tuition plan can be used at any qualified higher education institution in the country and abroad. If the tuition is more expensive than the contract value, the family will have to make up the difference.

What if a student decides to attend an out-of-state school?
The student can still use KAPT benefits. KAPT will pay the value of the tuition purchased under a purchaser’s tuition plan, and if the out-of-state tuition is more expensive than those rates, the family will have to make up the difference through other means. Remember, KAPT benefits can be applied to any qualified institution of higher education, public or private, anywhere in the country.

What happens if I move out of state?
Movement out of state will not affect your KAPT account and will not affect the value of your tuition plan. If a student attends a Kentucky public college or university as an out-of-state student, and the out-of-state tuition charges exceed the value of the plan, the student will be responsible for the difference.

Are transfers among different types of KAPT tuition plans permitted?
Yes, until the beneficiary begins using benefits. Depending on the change in plans, your contract cost may increase or decrease.

Are transfers among different types of schools permitted after a student enrolls?
Yes. Transfers among colleges and universities are permitted, and any unused benefits under the contract can be used at the new college or university.

If I cancel my contract, may I get back into the program at a later date at the same price?
No, but anyone may re-enter the program during future enrollment periods by purchasing a new contract. Costs will likely be higher at the time of re-entry, so it is advantageous to remain in KAPT after a contract is established.

What if I simply can no longer afford to make payments into KAPT?
You can downgrade your tuition plan to a less expensive plan or you can choose to cover a fewer number of tuition years. This would result in either a lower payment amount or—if the payments already made by you are sufficient to cover the price of the downgraded plan—a paid-in-full tuition plan contract.

How many years of tuition can I purchase?
A total of five tuition years among the three KAPT plans may be purchased for one beneficiary by the same purchaser or different purchasers. Only two years of tuition may be purchased under the Value Plan for the same beneficiary.

Once I open a KAPT account, can I purchase additional years of tuition in the future?
Yes. You can buy additional years of tuition, up to the five-year maximum, during future enrollment periods by purchasing a new contract at the costs at that time. You may not add additional years to your current contract.

Can the purchaser of my account be changed?
The purchaser may be changed in certain circumstances such as death, disability, or divorce.

Can I change the beneficiary on my account?
Yes, as long as the new beneficiary is an eligible member of the family of the current beneficiary.

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KESPT and Other Education Savings Plans

How is KAPT different from Kentucky’s Section 529 savings program?
The Kentucky Education Savings Plan Trust (KESPT) is Kentucky’s qualified state tuition “savings” program under Section 529 of the Internal Revenue Code and is also administered by the Kentucky Higher Education Assistance Authority. KESPT offers three investment options, and there is no guarantee that account savings will cover higher education expenses. Savings in KESPT can be used for the full-range of college expenses (tuition and fees, room, board, books, and supplies). KAPT, by contrast, guarantees the future payment of tuition in the Value and Standard Plans. Different families have different needs—some like the flexibility of the savings program; others, the discipline and guarantee of KAPT. KESPT and KAPT should be considered complementary because they help families cover the full range of higher education costs. That’s why numerous other states have both a prepaid and a savings option in place. Individuals may choose to participate in either KAPT or KESPT, or both. To request more information about KESPT, call 1-877-KY TRUST (598-7878) or visit www.kysaves.com.

Can I transfer funds to KAPT from KESPT or other Qualified Tuition Programs?
Yes. Funds may be transferred once per year without changing beneficiaries. Funds may be transferred to an account with a different beneficiary if the new beneficiary is an eligible member of the family of the current beneficiary. Call 1-888-919-KAPT and press option 2 to request a KAPT rollover form.

Can I transfer funds from KAPT to KESPT or other Qualified Tuition Programs?
Yes. Funds may be transferred once per year without changing beneficiaries. Funds may be transferred to an account with a different beneficiary if the new beneficiary is an eligible member of the family of the current beneficiary. Partial transfers from KAPT are not allowed. Transfer requests should be made through the program to which you are transferring funds.

Can I transfer funds to KAPT from Coverdell Education Savings Accounts or U.S. Savings Bonds?
Yes. Funds may be transferred from Coverdell Education Savings Accounts (formerly known as “Education IRAs”) and proceeds from certain qualified U.S. Savings Bonds. Call 1-888-919-KAPT and press option 2 to request a KAPT rollover form. Please consult your tax advisor regarding eligible rollovers from these types of assets.

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Payments and Pricing

What payment plans are available?
Purchasers can choose to make payments in the following ways:

• By a single lump sum
• By monthly payments over three, five, or seven years
• By a down payment plus monthly payments over three, five, or seven years
• By monthly payments until the beneficiary’s projected year of enrollment.

How are plan prices determined?
Prices are based on tuition and fee rates at the Kentucky institution(s) specific to the guarantee of the tuition plan. In addition, an actuarial analysis is applied that reflects the risk associated with predicting future tuition and mandatory fee inflation, investment returns, and administrative costs.

Why is the total of the monthly payments higher than the
Monthly payments include an interest component to take into account the fact that the full contract purchase price is not available for immediate investment on your behalf. The fall 2004 enrollment annual investment premium included in the monthly installment prices is 7.25 percent. Purchasers signing up in future years may have installments that reflect a different rate, determined annually with new pricing by the Fund’s actuaries. However, once you sign up, your contract price will not change.

Can I make a different down payment amount than the amounts listed and get a different payment amount?
If you make a down payment of $6,000 or more, you may request a payment recalculation. To do so, select a payment schedule of either 3 years monthly, 5 years monthly, or 7 years monthly on the application. Do not select an option with a down payment. You must submit a signed written request for the recalculation along with the full down payment before the recalculation will be done.

Can I request a payment schedule different from those listed?
No.

How do I make payments?
You may make monthly payments by mail with a KAPT coupon book or by automatic deductions from your bank account. After your application has been processed, KAPT will send you payment instructions.

May I make KAPT payments through payroll deduction?
You will need to ask your employer if payroll deduction for KAPT is available where you work. Currently, payroll deduction is available in many government agencies and some large and small private companies. If your employer is not participating, see the Employees and Employers section on this website or have your payroll officer call KAPT for more information. Note that contributions to KAPT are made with after-tax dollars, not pre-tax dollars, regardless of the method of payment.

When are payments due?
All payments—lump sums, down payments, and first monthly payments—will be due on February 1, 2005, for purchasers who enroll during the fall 2004 enrollment period.

How long can I make payments?
You can make payments from now until your beneficiary’s projected college entrance year by choosing the extended monthly payment option. The projected college entrance year you list on your application will determine your length of payment under the extended monthly payment option. Find your beneficiary’s projected entrance year on the enclosed pricing sheet under Extended Monthly Payment Option to determine your payment amount under this option. Please note that your account must be paid in full before July 1 of the projected college entrance year. Therefore, the 3-year payment option is only available if your beneficiary has a projected college entrance year of 2008 or higher, the 5-year payment option is only available if the college entrance year is 2010 or higher, and the 7-year payment option is only available if the college entrance year is 2012 or higher.

Can I pay off my account early?
Yes. You can call 1-888-919-KAPT and press option 2 to request a payoff amount at any time.

Can I change my payment plan?
Yes. You may submit a request in writing to change your payment plan at any time. A plan change fee will apply. Keep in mind your account must be paid in full before
July 1 of the projected college entrance year.

What administrative fees will I have to pay?
A list of KAPT administrative fees is available in the Enrollment Information.

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Refunds

What if the student decides not to go to college?
For a small fee, KAPT contract benefits may be transferred to a member of the family of the beneficiary. If the new beneficiary is an older family member, benefits may be transferred as long as the plan will be paid in full by the new maturity year. Otherwise, a transfer of benefits to an older qualified family member may require additional payments.

Alternatively, a purchaser may want to retain the contract because a student can use the benefits indefinitely after the projected college entrance year.

A final option is to cancel all of the contract. See information below regarding cancellations.

What happens if I cancel my KAPT contract?
A purchaser may cancel a contract at any time.

If you cancel before July 1 of the projected college entrance year, you will receive a refund of payments made minus administrative and cancellation fees.

If you cancel on or after July 1 of the projected college entrance year, you will receive the tuition payout value of the account at that time minus administrative and cancellation fees and any benefits already used. Earnings that are refunded will be subject to federal and state income taxes and a 10 percent federal tax penalty.

If you cancel due to the death or permanent disability of the beneficiary, you will not be charged the cancellation fee or the 10 percent federal tax penalty. Earnings that are refunded will be subject to federal income taxes.

What if my beneficiary receives a scholarship?
If your beneficiary receives a scholarship for qualified higher education expenses, you may request a refund of your account up to the amount of the scholarship without being charged the cancellation fee or the 10 percent federal tax penalty. Earnings that are refunded due to scholarship will be subject to federal income taxes. Keep in mind that KAPT funds can be used for all qualified higher education expenses, so if your beneficiary receives a scholarship that covers tuition, your KAPT funds could still be used for other expenses like room, board, books, and supplies or graduate school.

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Tax Issues

What are KAPT’s tax advantages?
KAPT offers significant tax advantages. Earnings on your KAPT account are tax free at both a state and federal level when used for qualified higher education expenses.

Please note that the law allowing federal tax-free withdrawals is set to expire on December 31, 2010. Congress may or may not extend the law beyond this date. If the law is not extended, earnings that are used for qualified higher education expenses after 2010 will be taxable to the beneficiary at the beneficiary’s tax rate.

Is there a tax deduction for KAPT contributions?
Contributions to KAPT are currently not eligible for a federal or Kentucky state tax deduction. Also, contributions to KAPT are made with after-tax dollars, not pre-tax dollars. Please consult your tax advisor for personal tax questions.

Can I deposit UGMA or UTMA funds in a KAPT account?
KAPT allows custodians for minors under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UGMA/UTMA) to open KAPT accounts. The accounts are subject to certain restrictions, which are described in the Master Agreement. Custodians should consult a tax advisor about the consequences of opening and holding KAPT accounts, as well as legal counsel regarding their rights and responsibilities as custodians. Please call 888-919-KAPT and press option 1 for instructions on completing a KAPT application for a UGMA/UTMA account.

What are the gift tax implications for a KAPT account holder?
Contributions to KAPT are considered a completed gift for gift tax purposes. No federal gift tax would be imposed on a purchaser for gifts to a beneficiary which do not exceed the annual gift tax exclusion amount (currently $11,000). If an account holder makes up to $55,000 in contributions in a single year, the contributions can be treated as having been made ratably over five years. As with any personal tax questions, it is important to consult your tax advisor.

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KAPT Enrollment Information

KAPT enrollment is currently closed. Watch the website for the dates of the next enrollment period.

The following documents are needed to enroll in KAPT. They are available to print out using Adobe Acrobat Reader. To download the free Adobe Acrobat Reader, click here. To access each document, click on the link.

For information on each of these documents, read the KAPT Program Overview.

If you would like to receive the KAPT enrollment kit by mail, or if you have any questions, please call 1-888-919-KAPT and press option 1.

• Fall 2004 Enrollment Period Prices
• Application - Apply Online or Print Application to Mail In (not available at this time)
• Automatic Payment Form
• Disclosure Statement (not available at this time)
• Fee Schedule
• Master Agreement (not available at this time)

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Parents of Newborns
KAPT is for Newborns!

Your baby's future will never be more affordable. For as little as $1 a day you can enroll your infant or toddler in KAPT, insuring that he or she will be provided with higher education. It is never too early to pay for college, because just as children grow, so does the cost of college tuition. By paying for college today, you are guaranteed tomorrow's tuition at lower prices today.

Parents can pre-pay tuition in one lump sum or in manageable monthly payments over many years. Plans and payment options may be changed at any time, and because KAPT is not tied to the stock market, your investment is guaranteed.

Get KAPT, because higher education shouldn't be out of reach!

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Grandparents
KAPT is for Grandchildren!

Give a priceless gift to your grandchild by insuring that they can can receive a higher education. Guaranteed to keep college costs capped, KAPT allows you pay for tomorrow's tuition at lower prices today.

Because KAPT does not depend on the stock market and because every investment grows completely tax-free, the program offers a safe and smart way to save for college.

There is a KAPT plan for every budget, with some payments as low as $1 a day for newborns and toddlers. Grandparents or other account holders can pre-pay tuition in one lump sum or in manageable monthly payments over many years

KAPT can be used at any private or public Kentucky college, as well as colleges and universities nationwide. Benefits can be transferred among siblings and cousins with no penalties, so you can be sure that your investment will be used to help your family's younger generation in achieving a great start in adulthood.

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KAPT is for Employees & Employers!

Today’s Kentucky government is deeply committed to providing opportunity to all of its residents through affordable higher education.

It is in this context that KAPT, Kentucky’s Affordable Prepaid Tuition, was created. The program is built on the success of 19 other states with prepaid tuition plans. By providing a way for families to pay tomorrow’s tuition at lower rates today, KAPT is designed, quite literally, to "cap" tuition. What’s more is that KAPT allows families to make affordable installment payments. And the investments grow completely exempt from either state or federal taxes.

Making higher education affordable for all Kentucky residents can be nothing less than a comprehensive, collaborative effort. There are several ways that employers can contribute:

(1) Payroll Deduction - Payroll Deduction Forms
(2) Employee Matches and Scholarships
(3) Contribution to the KAPT Foundation
(4) Employee and Community Outreach

Please click one of the selections above for more details about any one of these opportunities to contribute.

Payroll Deduction

What is payroll deduction?
Payroll deduction allows employers a way to give employees a chance to easily contribute to their prepaid tuition account. By automatically deducting contributions from their paycheck and depositing them directly into their KAPT account, employers can give their employees peace of mind regarding their children and grandchildren’s education.

What are the requirements for setting up KAPT payroll deduction?
For employers, there is no quota for the number of employees wishing to participate in payroll deduction. KAPT will accept deductions from companies with only one participating employee. For employees, there is a minimum monthly contribution per KAPT account, based on the payment of the specific KAPT plan they choose. An employee must have an active KAPT account before any payroll deduction can occur.  Please click here for Employer Payroll Deduction Instructions.

Does Kentucky state government offer payroll deduction?
Kentucky state government offers payroll deduction to its employees.  Employees should complete the Kentucky State Government Employee Payroll Deduction Authorization Form, which is available by clicking here, and submit the form by mail to KAPT, KHEAA, PO Box 798, Frankfort, KY 40602-0798 or by fax to (502) 696-7373. If you are a Kentucky state government payroll officer who has questions about KAPT payroll deduction, please call (502) 696-7441.

If payroll is handled through an outside company, will this pose a problem for KAPT’s payroll deduction?
No. Your company would still need to submit a signed Payroll Deduction Agreement to KAPT, but the way your company handles internal transactions is decided by you.

What if a company is very large and has many divisions in diverse locations? Will each division need to complete a Payroll Deduction Agreement?
No. Only one Payroll Deduction Agreement will be required per company.
 
Can employers make matching contributions to an employee’s account or create a scholarship account for employees or their families?
Absolutely. You are welcome to call KAPT’s office directly for details and guidance.

Are deductions made with pre-tax dollars?
No. Payroll deduction contributions are made after taxes have been deducted from your employees’ salaries.

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If you are interested in providing KAPT payroll deduction as a service to your employees, please read and use the Adobe Acrobat PDF forms below. If you have any questions, please call 1-888-919-KAPT and press option 3.

Payroll Deduction Letter to Employers from KAPT

Employer Payroll Deduction Instructions

Private Employer Payroll Deduction Authorization Form

Kentucky State Government Payroll Deduction Authorization Form

Employer Payroll Deduction Notice

KAPT/Employer Payroll Deduction Agreement

Employee Matches and Scholarships

While every KAPT contract can only have one designated purchaser and one designated beneficiary, anybody can contribute to a particular contract. That includes the practice of an employer making contributions to an employee’s KAPT contract.

While there may not be a way to guarantee employee retention, KAPT can offer a wonderful incentive for employees to stay loyal to your company. You may choose to match employee contributions to KAPT accounts or open your own KAPT account to provide a full scholarship to children or grandchildren of workers who stay with you over a number of years. Since KAPT benefits can apply to adults’ continuing education, you can even consider creating a scholarship for employees themselves. To learn more, click here.

If you are interested in providing employee matches or scholarships, please feel free to contact the KAPT office at (888) 919-KAPT and press option 3.

If you have any questions as to the tax implications of offering either of these programs, please consult your tax advisor.

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Contributions to the KAPT Foundation

The KAPT Foundation was founded in 2002 to provide selected young Kentuckians from lower- to middle-income families with full tuition at Kentucky public universities, in exchange for an intensive commitment to community service projects in the state.

To learn more on how you can help contribute to the KAPT Foundation, click here.

Employee and Community Outreach

If you would like to schedule a KAPT presentation or request materials to distribute to your employees or community and civic groups, please click here or call 1-888-919-KAPT and press option 3.f or call 1-888-919-KAPT and press option 3.

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Scholarship Information

KAPT Foundation Scholarships

The KAPT Foundation was founded in 2002 to provide selected young Kentuckians from lower to middle income families with full tuition at Kentucky public universities, in exchange for an intensive commitment to community service projects in the state.

To win an award from the KAPT Foundation, a Kentucky ninth grade student must:

(1) Submit an application to the KAPT Foundation, that includes essays and grades.

(2) Demonstrate in that application a history of community service in middle school;

(3) Demonstrate in that application financial need (i.e. a family income of less than $40,000)

(4) Work at least 100 hours each year in high school in community service programs; and

(5) Most significantly, pledge to spend the year after graduating high school engaged full-time in an accredited community service program in Kentucky, such as Americorps.

Selected Kentucky ninth grade students will be awarded a full-paid contract under the Standard Plan of Kentucky's Affordable Prepaid Tuition (KAPT). The student's award will be equivalent to the price of tuition at Kentucky's most expensive public university at the time the student enters college. This money can be used at any institution of higher education — public or private — anywhere in the country.

To learn more on how you can help contribute to the KAPT Foundation, click here.

Click here for the KAPT Foundation Scholarship application.

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Using KAPT Benefits

Using KAPT benefits is easy. An information packet is sent to account owners in the spring of the beneficiary’s college enrollment year. The Account Owner’s Guide to Using KAPT Benefits, other benefit use forms, and a payout value chart are provided below.

Account Owner’s Guide to Using KAPT Benefits

Billing Authorization Form

Payout Value Chart

Residual Benefits Request Form

School Contact List

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KAPT Reports

• 2004 Update Brochure
• December 31, 2004, Actuarial Update
• FY2004 Actuarial Analysis
• FY2004 Audited Financial Statements
• 2003 Annual Report
• 2002 Executive Summary Annual Report

• March 31, 2005
• December 31, 2004
• September 30, 2004
• June 6, 2004

Board of Directors

• KAPT 2005 Board of Directors

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News
Last Update 4-14-06

April 14, 2006
Judge Issues Ruling in KAPT Lawsuit
Read the Ruling

April 12, 2006
2006 Board Meeting Schedule
Schedule

June 8, 2005
Bill Would Make 529 Plan Tax Benefits Permanent
Read the News Release

November 16 , 2004
KAPT Enrollment Ends Soon! Kentucky's Affordable Prepaid Tuition enrollment ends on December 13. Families who miss deadline will miss lowest prices.
Read the News Release

KAPT provides the following educational links as a service to those planning post-secondary education possibilities.

All links open in a separate window.

Kentucky Council on Postsecondary Education

Kentucky Education Savings Plan Trust (KESPT)

Kentucky Higher Education Assistance Authority

Kentucky State Government Official Site

Kentucky Community & Technical College System

The Association of Independent Kentucky Colleges & Universities

Go Higher Kentucky

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Forms

Forms
We have collected all KAPT forms in one place for your convenience. To open, read and print these forms, documents, and instructions, you will need to download the free Adobe Acrobat Reader. To download the Reader, click here.

All links open in a new window.

Fall 2004 Enrollment Period Prices

Application - Apply Online or Print Application to Mail In (not available at this time)

Account Owner’s Guide to Using KAPT Benefits

Automatic Payment Form

Billing Authorization Form

Change of Beneficiary Form

Change of Beneficiary Form due to death or disability of Beneficiary

Change of Purchaser Form due to death or disability of Purchaser

Change of Purchaser Form due to divorce

Disclosure Statement (not available at this time)

Employer Payroll Deduction Instructions

Employer Payroll Deduction Notice

Fee Schedule

KAPT/Employer Payroll Deduction Agreement

Kentucky State Government Payroll Deduction Authorization Form

Master Agreement (not available at this time)

Payroll Deduction Letter to Employers from KAPT

Residual Benefits Request Form

Rollover Form

Private Employer Payroll Deduction Authorization Form

Successor-In-Interest Form

UTMA Application Instructions

UTMA Acknowledgment Form

UTMA Successor Form

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Privacy Policy

Kentucky's Affordable Prepaid Tuition
KHEAA
PO Box 798 • Frankfort, KY 40602-0798 • 1-888-919-KAPT (toll-free)
www.getKAPT.com