Loan Calculation/FA Terms

What is Loan Interest??

• The cost of using someone else’s money

• The amount a lender charges a borrower and is a percentage of the principal balance

• 6.53%

• The original amount of a loan

What is Loan Interest Rate?

• Original amount borrowed

• The amount a lender charges a borrower and is a percentage of the principal balance

• Percentage borrowed

• When the loan is sent to the institution

As of now the Federal Student Loan Interest Rate is ____

_______ means to accumulate in regular increments over time (ex. interest accrues on a loan)

Capitalization:

When unpaid _______ is added to your loan principal (& earns interest)

Grace Period:

The ____ month period after you graduate where you do not have to repay the loan, but interest is accruing .

A loan starts ____ interest once the payment is ____. In other words, as soon as the college receives the payment from the loan provider.

• accruing; disbursed
• calculating; received
• accruing; approved
• pending; processed

Online course about managing your student loans that you must complete before signing your MPN

• Master Promissory Note

• No course is required for signing your MPN.
• Entrance Loan Counseling

• MPN

Master Promissory Note (MPN)- is a legal document in which you ________ your loan(s) and any accrued interest and fees. It also explains the terms and conditions of your loan(s).

• refuse to pay
• promise to repay

• ignore the terms
• accept the loan without conditions

A student takes out a $5,500 loan to finance their Sophomore year. Assuming they graduate in the traditional four years, how much interest has accrued when it goes into repayment?  (Numbers and a decimal point only)