5_7 Student Loan Repayment Quiz

Indicate which statement regarding student loan grace periods is TRUE.

• You cannot repay your federal student loan during the grace period, because it will interfere with the repayment schedule

• The grace period starts six months after a student receives a federal student loan

• The "grace period" for a federal student loan (Stafford) loan kicks in six months after graduation OR six months after a student drops below half-time status

• Once your grace period ends, there are no other options other than repaying your loan immediately

Which of the following statements is TRUE?

• There is no way to have any portion of federal student loans forgiven.

• If you declare bankruptcy, your federal student loans will automatically be forgiven.

• If you finish school, your federal student loans will be forgiven as long as you have good grades.

• Part of your federal student loans can be forgiven under certain circumstances, including a public service career or making on-time payments for many years on certain payment plans.

Sam has $30,000 in federal student debt and has a monthly payment of $300/month. Jordana also has $30,000 in federal student debt and has a monthly payment of $200/month. Which of the following statements is TRUE?

• Jordana has a LOWER interest rate on her loan because she has a HIGHER credit score.

• Sam has a SHORTER repayment term and will pay MORE in interest.

• Sam has a SHORTER repayment term and will pay LESS in interest.

• Jordana has a SHORTER repayment term and will pay LESS in interest.

If you consolidate your loans through the Federal Direct Loan Consolidation Program, this means that you can...

• Consolidate (combine) all student loans so that you can reduce your loan balances by 50%.

• Consolidate (combine) multiple federal education loans into one loan to make loan payment and monitoring easier.

• Consolidate (combine) all student loans and credit card loans into one loan to make loan payment and monitoring easier.

• Consolidate (combine) all federal student loans and other loans you may take out in the future (such as a mortgage) into one loan to make loan payment and monitoring easier.

Which of the following is a potential consequence you may face if you don't pay back your student loans?

• If you don't remember taking out student loans, you can appeal to have the student loans forgiven.

• Your credit score is negatively impacted.

• If you wait five years, your student loan is likely to be forgiven.

• You may still be eligible for federal education loans, but you are no longer eligible for private education loans.

Samuel takes out a federal student loan for $5,000 to help pay for his freshmen year in college. Which statement below is TRUE about this loan?

• Since he took out a loan his freshman year, he will not be allowed to borrow a federal student loan to pay for his sophomore year.

• He is required to start repaying the loan while he is in school.

• He would be charged (begin accruing) interest on this loan immediately if it was an unsubsidized federal student loan. He can make interest payments while he is still in school to minimize his total student loan debt.

• His interest rate is variable (may change) for the term of his loan

Samantha graduates with $30,000 in debt and has a monthly student loan payment of $300. She earns a monthly salary of $6,000.

Jacob graduates with $60,000 in debt and has a monthly student loan payment of $600. He earns $3,000 per month.

Indicate which statement below is TRUE.

• 10% of Jacob's monthly salary goes toward paying off his student loan.

• 10% of Samantha's monthly salary goes toward paying off her student loan.

• As a percentage of salary, Samantha pays LESS for her monthly student loan payment then Jacob does.

• It is always better to have student debt that requires paying a HIGHER percentage of your salary to cover your monthly payment.

Brian is about to give a short presentation on repaying federal student loans and he's come to you to fact check his information. Which of the following statements is the only one that is TRUE?

• There are only two different repayment options for federal student loans.

• Repayment of the loan is required immediately after the loan amount is disbursed (or received) by the borrower.

• Once a repayment option is selected, it cannot be changed.

• The various loan repayment options differ in the monthly payment required and the length of time it will take to repay the loan.

Kevin is struggling to make payments on his federal subsidized and unsubsidized loans. His loan servicer reached out to him earlier this week and asked if he wanted to postpone payments for the next six months. Kevin is discussing it with you and says, "This is so great! If I accept this, I don't have to make any payments for six whole months!" Which of the following do you tell Kevin?

• "It's important to know whether you would be using deferment or forbearance, because under FORBEARANCE, interest continues to accrue on your subsidized loans."

• "Don't take the offer, Kevin; it's a scam!"

• "That is awesome! Definitely accept the offer soon, because this is a one-time, unique opportunity, and you don't want to miss it!"

• "It's important to know whether you would be using deferment or forbearance, because under DEFERMENT, interest continues to accrue on your subsidized loans."

Julia is having a hard time understanding how her monthly student loan payments will work after graduation. She knows you just learned about student loan repayment and tells you all she knows. Which of the following statements Julia makes is TRUE?

• Your monthly student loan payment goes toward the principal balance, accrued interest, and a mandatory monthly fee charged by the lender.

• If you don't make any interest payments, it can "capitalize", or be added to the principal balance, which increases how much you owe overall.

• Assuming that you are not falling behind on your loan payments, the amount of interest that you pay each month will INCREASE over time.

• When you make a payment, the lender puts money toward the principal first. Then, the remaining balance is put towards any accrued interest.