CEP Financial Aid and Scholarships 5

Question 1

Which repayment plan bases monthly federal student loan payments on a percentage of the borrower's discretionary income?

Accepted Answer

Income-Driven Repayment (IDR) Plan

Answer

Income-Driven Repayment plans cap monthly payments at a set percentage of discretionary income and offer loan forgiveness after 20–25 years of qualifying payments.

Question 2

A student wins a $10,000 private scholarship. The college reduces the student's institutional grant by $10,000. This practice is called:

Accepted Answer

Scholarship displacement

Answer

Scholarship displacement occurs when a college reduces its own aid to offset an outside scholarship, leaving the student's net cost unchanged.

Question 3

What is the primary difference between a subsidized and an unsubsidized federal Direct Loan?

Accepted Answer

The government pays interest on subsidized loans during in-school and deferment periods

Answer

For subsidized Direct Loans, the federal government covers interest while the student is enrolled at least half-time and during grace and deferment periods.

Question 4

529 college savings plan withdrawals used for qualified higher education expenses are:

Accepted Answer

Tax-free at the federal level

Answer

Earnings on 529 plan withdrawals used for qualified education expenses are exempt from federal income tax.

Question 5

Which of the following best describes the role of an educational planner when helping a family with scholarship searches?

Accepted Answer

Identify a diverse portfolio of local, national, and institutional scholarship opportunities matched to the student's profile

Answer

Educational planners help families build a comprehensive, personalized scholarship search strategy spanning institutional, local, and national sources aligned with the student's strengths.

(CEP) Certified Educational Planner Practice Test

(CEP) Certified Educational Planner Practice Test

CEP Financial Aid and Scholarships 5