Loans Student Loans 3

Question 1

What is the grace period for most federal Direct Student Loans after a student graduates or drops below half-time enrollment?

Accepted Answer

6 months

Answer

Federal Direct Loans provide a 6-month grace period after graduation or dropping below half-time enrollment before repayment begins.

Question 2

Forbearance on a student loan differs from deferment primarily because:

Accepted Answer

Interest always accrues on all loan types during forbearance, even subsidized loans

Answer

During forbearance, interest accrues on all loan types including subsidized loans, whereas during deferment the government covers interest on subsidized loans.

Question 3

Which agency services the majority of federal student loans after disbursement?

Accepted Answer

Federal Student Aid (FSA) servicers contracted by the US Department of Education

Answer

The US Department of Education contracts federal loan servicers — such as MOHELA — to manage billing, repayment, and borrower services for federal student loans.

Question 4

Under the SAVE plan, discretionary income is calculated based on what percentage above the federal poverty guideline?

Accepted Answer

225%

Answer

The SAVE plan defines discretionary income as the amount above 225% of the federal poverty guideline, protecting more income from payment calculations.

Question 5

What happens to a federal student loan that is more than 270 days past due?

Accepted Answer

It enters default status

Answer

A federal student loan is considered in default after 270 days of non-payment, triggering serious consequences like wage garnishment and credit damage.

Loans Practice Test

Loans Practice Test

Loans Student Loans 3