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WorksheetsExit ticket Student & Predatory Loans
Total questions: 6
Worksheet time: 18mins
How do the Annual Percentage Rates (APRs) on payday loans get to be so high?
The loans go to affluent banking customers, so they charge a lot for the exclusivity
The loan amounts are small, but the fees charged are relatively high and are renewed on a very short time-scale
They make most of their money through ATM withdrawal fees as well as overdraft fees on checking accounts
The amount of money people borrow using payday loans is typically quite high – $10,000 or more – so the fees are also high
Three of these statements reflect payday loans. Choose the other statement, which is aligned with a traditional bank loan instead.
Easy to obtain without a lot of paperwork
Requires a credit check and suitably high credit score
Requires payment in full in less than a month
APR can easily be over 200%
Why are payday loans so popular?
They are a fast, easy way to save money and budget effectively
They meet the need for quick cash for very large purchases such as cars and homes
They are a terrific way to build your credit history and improve your credit score
They are accessible to people who need to borrow small amounts of money and don’t have any better options
All of the following are benefits of federal student loans compared to private student loans, EXCEPT…
Federal student loans generally have lower interest rates
Federal student loans can be forgiven under specific circumstances
Federal student loans provide more options for repayment
Federal student loans have no limit to how much you can borrow
Christine owes $23,000 in student loans and has a minimum payment of $230 per month. She decides to make an additional $100 payment towards the loan principal every month. What impact will the additional payment have?
The additional payment will increase the total cost of her loan
The additional payment will decrease the total cost of her loan
The additional payment will increase the time it takes to repay her loan
The additional payment will decrease the interest rate charged on her loan
Which of the following student loan repayment plans would result in the same monthly payment over the course of the loan?
Standard Repayment Plan
Graduated Repayment Plan
Income-Based Repayment Plan
Pay As You Earn (PAYE) Repayment Plan
