PF 7.4 Student Loans

What are some differences between federal and private student loans?

• Federal student loans are funded by the government

• Federal student loans offer income-driven repayment plans

• Private student loans have have forgiveness options

• Private student loans are funded by private organizations

Why should you explore your federal loan options before private loan options?

• Federal loans have stricter repayment options
• Federal loans offer lower interest rates and more flexible repayment options.
• Private loans have better interest rates
• Private loans offer more financial assistance

Which student loan does NOT charge you interest while you're in school as an undergraduate?

• Direct Subsidized

• Direct Unsubsidized

• Direct PLUS

• Private

What is the first step for getting a federal student loan?

• Submit a resume
• Complete the Free Application for Federal Student Aid (FAFSA)
• Call the loan officer directly
• Ask a friend to apply for you

After graduating, leaving school, or dropping below half-time, how long of a grace period do you have to start repaying your loan if you have a federal direct subsidized loan or a federal direct unsubsidized loan? ​ (a)   ​​ ​

• 6 months
• 1 year
• 3 months

What does a loan servicer do?

• A loan servicer bakes cakes
• A loan servicer sells cars
• A loan servicer manages loan accounts and assists borrowers with payments and inquiries.
• A loan servicer designs clothes

What are some reasons someone might switch from the standard repayment plan to a graduated, extended, or income-based plan?

• Lower initial payments, longer repayment period, fluctuating income
• Limited options, less flexibility, higher interest rates
• No benefits, same repayment terms, fixed interest rate
• Higher initial payments, shorter repayment period, stable income

What type of loan typically has the lowest interest rate?

• Payday loans

• Credit card loans

• Secured loans

• Unsecured personal loans

What is a secured loan?

• A loan that is backed by a promise to repay without any collateral.

• A loan that is backed by collateral, such as a house or car.

• A loan given without any background credit check.

• A loan with a variable interest rate that changes over time.

Which of the following is NOT a common loan repayment strategy?

• Debt snowball method, where you pay off debts from smallest to largest.

• Debt avalanche method, where you pay off debts with the highest interest rates first.

• Paying only the minimum payment on all debts.

• Investing in stocks with the hope of using the returns to pay off the loan.