Loans Student Loans

Question 1

What is the main difference between subsidized and unsubsidized federal student loans?

Accepted Answer

The government pays interest on subsidized loans while the student is in school

Answer

With subsidized loans, the US Department of Education pays the interest while the borrower is enrolled at least half-time, whereas interest accrues immediately on unsubsidized loans.

Question 2

Which federal form must students complete to apply for federal student aid, including loans?

Accepted Answer

FAFSA

Answer

The Free Application for Federal Student Aid (FAFSA) is required to determine eligibility for federal grants, work-study, and student loans.

Question 3

What is the standard repayment plan term for federal Direct Loans?

Accepted Answer

10 years

Answer

The standard repayment plan for federal Direct Loans requires fixed monthly payments over a 10-year period.

Question 4

Which type of student loan is based primarily on financial need as determined by the FAFSA?

Accepted Answer

Direct Subsidized Loan

Answer

Direct Subsidized Loans are awarded based on demonstrated financial need calculated through the FAFSA.

Question 5

What does 'loan capitalization' mean in the context of student loans?

Accepted Answer

Adding unpaid accrued interest to the principal balance

Answer

Capitalization occurs when accrued unpaid interest is added to the principal balance, increasing the total amount on which future interest is charged.

Loans Practice Test

Loans Practice Test

Loans Student Loans