CCC Student Loan Counseling & Education Debt 1 — Questions and Answers
Question 1: Which federal agency administers the federal student loan program?
- The Federal Reserve
- The U.S. Department of Education (Correct answer)
- The U.S. Department of Treasury
- The Consumer Financial Protection Bureau
Correct answer: The U.S. Department of Education
The U.S. Department of Education oversees and administers all federal student loan programs, including Direct Loans.
Question 2: What is the key difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan?
- Subsidized loans have a higher interest rate than unsubsidized loans
- Unsubsidized loans are only available to graduate students
- The federal government pays the interest on subsidized loans while the borrower is enrolled at least half-time (Correct answer)
- Subsidized loans require a credit check while unsubsidized loans do not
Correct answer: The federal government pays the interest on subsidized loans while the borrower is enrolled at least half-time
On Direct Subsidized Loans, the government pays the interest during in-school, grace, and deferment periods; on Unsubsidized Loans, interest accrues and is the borrower's responsibility.
Question 3: What is the combined annual borrowing limit for a first-year dependent undergraduate student for Direct Subsidized and Unsubsidized Loans?
- $3,500
- $5,500 (Correct answer)
- $7,500
- $9,500
Correct answer: $5,500
First-year dependent undergraduates may borrow up to $5,500 combined ($3,500 subsidized maximum) in Direct Loans per academic year.
Question 4: Direct PLUS Loans are available to which borrowers?
- Undergraduate students only
- Graduate or professional students and parents of dependent undergraduates (Correct answer)
- Independent undergraduate students only
- All federal student loan borrowers regardless of enrollment status
Correct answer: Graduate or professional students and parents of dependent undergraduates
Direct PLUS Loans are available as Grad PLUS Loans to graduate/professional students and as Parent PLUS Loans to parents of dependent undergraduates.
Question 5: What is the aggregate (lifetime) Direct Loan borrowing limit for dependent undergraduate students?
- $23,000
- $31,000 (Correct answer)
- $57,500
- $138,500
Correct answer: $31,000
Dependent undergraduate students may borrow a maximum of $31,000 in Direct Loans over their entire undergraduate career ($23,000 subsidized maximum).
Question 6: What is the standard repayment term for most federal student loans under the Standard Repayment Plan?
- 5 years
- 10 years (Correct answer)
- 20 years
- 25 years
Correct answer: 10 years
The Standard Repayment Plan requires fixed monthly payments over 10 years, which is the default repayment plan for federal student loans.
Question 7: When did Congress eliminate the Federal Family Education Loan (FFEL) program, ending the practice of private lenders originating federally guaranteed student loans?
- 2004
- 2007
- 2010 (Correct answer)
- 2013
Correct answer: 2010
The Health Care and Education Reconciliation Act of 2010 eliminated the FFEL program, moving all new federal student loan origination exclusively to the Direct Loan program.
CCC Student Loan Counseling & Education Debt 1
Which federal agency administers the federal student loan program?