Federal Aid Types Flashcards

What happens to a TEACH Grant if a recipient fails to complete the required teaching service?

Answer: It converts to a Direct Unsubsidized Loan with interest accruing from the grant disbursement date

If a TEACH Grant recipient does not fulfill the teaching service obligation, the grant converts to a Direct Unsubsidized Loan, and interest accrues back to the date of disbursement.

Which repayment plan bases monthly federal loan payments on the borrower's income?

Answer: Income-Driven Repayment (IDR) Plan

Income-Driven Repayment plans set monthly payments as a percentage of the borrower's discretionary income, making payments more manageable for low-income graduates.

What is the grace period for Federal Direct Subsidized and Unsubsidized Loans after leaving school?

Answer: 6 months

Federal Direct Subsidized and Unsubsidized Loans have a 6-month grace period after a student graduates, leaves school, or drops below half-time enrollment before payments must begin.

Federal Work-Study funds are paid in which form?

Answer: As wages paid through regular paychecks based on hours worked

Work-Study funds are paid as regular wages through paychecks for hours actually worked, not credited directly to the student's account.

Which of the following is true about Federal Direct Loans compared to private student loans?

Answer: Federal loans offer income-driven repayment and forgiveness options that private loans do not

Federal Direct Loans offer borrower protections including income-driven repayment, Public Service Loan Forgiveness, deferment, and forbearance options that private loans typically do not provide.

Which federal aid program provides funds to schools to award as grants and work-study, rather than giving money directly to students?

Answer: Campus-Based Aid Programs (SEOG and FWS)

Campus-based programs (SEOG and Federal Work-Study) provide funds to eligible schools, which then award the aid to students based on financial need and school-specific criteria.