FiCEP Student Loan Counseling 2

Question 1

The Pay As You Earn (PAYE) repayment plan generally caps monthly payments at what percentage of a borrower's discretionary income?

Accepted Answer

10%

Answer

PAYE caps payments at 10% of discretionary income and offers loan forgiveness after 20 years of qualifying payments for eligible new borrowers.

Question 2

Under the Graduated Repayment Plan for federal student loans, how do monthly payments change over the repayment period?

Accepted Answer

Payments start lower and increase every two years

Answer

The Graduated Repayment Plan starts with lower payments that increase every two years, typically over a 10-year period, on the assumption the borrower's income will grow.

Question 3

What is the maximum repayment term available under the Extended Repayment Plan for federal student loans?

Accepted Answer

25 years

Answer

The Extended Repayment Plan allows borrowers with more than $30,000 in federal loans to repay over up to 25 years, with either fixed or graduated payments.

Question 4

Under Income-Based Repayment (IBR) for borrowers who first borrowed after July 1, 2014, monthly payments are capped at what percentage of discretionary income?

Accepted Answer

10%

Answer

Newer IBR borrowers (first borrowing after July 1, 2014) benefit from a reduced cap of 10% of discretionary income, compared to 15% for earlier borrowers.

Question 5

For Income-Driven Repayment (IDR) plans, 'discretionary income' is defined as the amount above what percentage of the federal poverty guideline for the borrower's family size?

Accepted Answer

150%

Answer

Discretionary income is calculated as the difference between the borrower's annual income and 150% of the federal poverty guideline for their family size and state, for most IDR plans.

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Student Loan Counseling 2