Understanding Federal Student Loans

What is the principal balance of a student loan?

• The total amount of interest accrued

• The original amount borrowed

• The total loan balance including interest

• The monthly payment amount

What is the total loan balance on a billing statement?

• The sum of principal and interest

• The monthly payment amount

• The original loan amount

• The interest rate

Which type of loan has an interest subsidy while you are in school?

• Direct Consolidation Loan

• Direct Subsidized Loan

• Direct PLUS Loan

• Direct Unsubsidized Loan

What happens to interest on Direct Unsubsidized Loans while you are in school?

• It is paid by the government

• It is added to the principal

• It starts accruing immediately

• It does not accrue

When does repayment begin for Direct Subsidized and Unsubsidized Loans?

• After graduation

• Immediately after disbursement

• After a six-month grace period

• After one year

Who is the lender of federal student loans?

• Private banks

• The U.S. Department of Education

• Your loan servicer

• Your school

What is the role of a loan servicer?

• To set interest rates

• To provide scholarships

• To manage loan payments and applications

• To lend money to students

What is one way to reduce the amount of interest paid over the loan period?

• Extend the loan term

• Consolidate loans

• Decrease monthly payments

• Make extra payments

Which repayment plan could lead to loan forgiveness?

• Extended repayment plan

• Graduated repayment plan

• Standard repayment plan

• Income-driven repayment plan

Which employment type might qualify for Public Service Loan Forgiveness?

• Self-employment

• Private sector jobs

• Part-time jobs

• Public service jobs