Legal Question in Business Law in Kentucky

I would recommend you just take all of your paperwork to an attorney in your area for a consultation. Many attorneys even give free consultations.

Honestly, I can't even make sense of what is going on here. A university cannot "tax" you; the government taxes you. I cannot think of any reason there should be sales tax attached to tuition, although there would likely be tax for books and materials. Did they perhaps charge you interest on the tuition you owed because it wasn't paid by a certain date? It was always the policy at my alma mater that a late disbursement date from government loans/grant did not subject the student to penalties, and they would front a $500 voucher out of that money to purchase books and materials at the university bookstores. I suspect that policy actually comes from the government, to prevent universities and colleges from milking more money from students who are receiving financial assistance.

The question is, what university are you attending? Is it a state university/community college or private accredited college, or one of those for-profit diploma mills? There has been a significant amount of scrutiny recently of the practices of these for-profit educational institutions, and there is currently legislation being considered to regulate them. Certainly if you believe their business practices have been unethical, and your government-provided grant money mishandled, you should speak with an attorney.