Understanding Student Loans Quiz

What are the two main types of student loans available in the United States?

• Subsidized and Unsubsidized

• Federal and Private

• Short-term and Long-term

• Fixed-rate and Variable-rate

Which type of student loan typically offers lower interest rates and more flexible repayment options?

• Private loans

• Federal loans

• Subsidized loans

• Unsubsidized loans

What happens to the interest on subsidized federal student loans while a student is in school at least half-time?

• It is added to the loan principal.

• It is paid by the government.

• It is waived entirely.

• It accumulates but does not need to be paid until graduation.

What is the typical impact of student loans on a student's credit score when payments are made on time?

• It has no impact.

• It decreases the credit score.

• It increases the credit score.

• It initially decreases, then increases the credit score.

What is the consequence of defaulting on a student loan?

• The loan amount is forgiven.

• The loan is deferred.

• The credit score is negatively affected.

• The interest rate is lowered.

How does the interest rate of a private student loan compare to a federal student loan?

• It is always lower.

• It is based on credit score, so it can be higher or lower.

• It is always higher.

• It is the same.

What can happen if you make a late payment on your student loan?

• The loan is immediately defaulted.

• Your interest rate decreases.

• It can negatively affect your credit score.

• You receive a monetary reward.

Which of the following is NOT a consequence of defaulting on your student loans?

• Wage garnishment

• Seizure of tax refunds

• Increase in credit score

• Ineligibility for further federal student aid