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What do you call the mandatory information session, which takes place before you receive your first federal student loan?
A. Forbearance
Incorrect
B. Entrance Counseling
Correct!
C. Default
Incorrect
D. Exit Counseling
Incorrect
Correct answer: Entrance Counseling During entrance counseling, you will learn about the following:
  • What a Direct Loan is and how the loan process works
  • Managing your education expenses
  • Other financial resources to consider to help pay for your education
  • Your rights and responsibilities as a borrower
What do you call the need-based federal student aid program that provides part-time employment while you are enrolled at least half time in school to help pay your education expenses?
A. Work Study
Correct!
B. Volunteer Work
Incorrect!
C. Work Graded Study
Incorrect!
D. Graduate Work
Incorrect!
Correct Answer: Work Study Work-study provides part-time employment while you are enrolled at least half time in school. It’s available to undergraduate, graduate, and professional students with financial need. It’s administered by schools participating in the Federal Work-Study Program.
How long is the grace period on a Federal Direct loan?
A. 9 months
Incorrect!
B. 3 months
Incorrect!
C. 6 months
Correct!
D. 12 months
Incorrect!
Correct Answer: 6 Months Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans have a six-month grace period before payments are due
How long is the grace period on a Federal Perkins loan?
A. 12 months
Incorrect!
B. 6 months
Incorrect!
C. 5 months
Incorrect!
D. 9 months
Correct!
Correct Answer: 9 Months Payments on your Perkins Loan begin nine months after you graduate or cease half-time enrollment. During your nine-month grace period, you will receive correspondence from servicer regarding repayment of your Perkins Loan. You may be allowed to take up to 10 years to pay back your Perkins Loan.
Once in repayment, what do you call a postponement of your student loan payment where the government will not pay any of the interest?
A. Deferment
Incorrect!
B. Consolidation
Incorrect!
C. Forbearance
Correct!
D. Disbursement
Incorrect!
Correct Answer: Forbearance If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).
What do you call a postponement of your student loan payment when the government pays for the interest on your subsidized loans only?
A. Postponement
Incorrect!
B. Deferment
Correct!
C. Default
Incorrect!
D. Consolidate
Incorrect!
Correct Answer: Deferment During a deferment, you do not need to make payments. What’s more, depending on the type of loan you have, the federal government may pay the interest on your loan during a period of deferment.
What is a grant?
A. Financial aid that does not need to be paid back unless you withdraw from school
Correct!
B. Financial aid that you pay back once you graduate
Incorrect!
C. Financial aid that you have to pay interest on
Incorrect!
D. Financial aid that is contingent on work-study
Incorrect!
Correct Answer: Financial aid that does not need to be paid back unless you withdraw from school Grants are often called “gift aid” because they are free money—financial aid that doesn’t have to be repaid. Grants are often need-based and can come from the federal government, your state government, your college or career school, or a private or nonprofit organization. Do your research, apply for any grants or scholarships you might be eligible for, and be sure to meet application deadlines!
Occasionally you might have to pay back part or all of a grant if, for example, you withdraw from school before finishing an enrollment period such as a semester.
How many years can you use a Master Promissory Note before it expires?
A. 2 years
Incorrect!
B. 5 years
Incorrect!
C. 10 years
Correct!
D. 6 years
Incorrect!
Correct Answer: 10 years The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s); for instance, it will include information on how interest is calculated and what deferment and cancellation provisions are available to you. Unless your school does not allow more than one loan to be made under the same MPN or you obtain an endorser when borrowing a Direct PLUS Loan, you can take out additional Direct Loans on a single MPN for up to 10 years.
What is the process of combining one or more loans into a single loan?
A. Consolidation
Correct!
B. Default
Incorrect!
C. Delinquent
Incorrect!
D. Disbursement
Incorrect!
Correct Answer: Consolidation Consolidation is the process of combining one or more loans into a single new loan. The Department of Education is the only entity that provides federal student loan consolidation. Any other consolidation through a private lender is considered a debt consolidation and you will not have the same entitlements as a federal student loan.
If you fail to repay your Federal Student Loan according to the terms agreed upon in your promissory note and your loan is 270 or more days past due, your loan is considered to be _____________.
A. Postponed
Incorrect!
B. Consolidated
Incorrect!
C. Defaulted
Correct!
D. Discharged
Incorrect!
Correct Answer: Defaulted Failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days. You may experience serious legal consequences if you default as well as wage garnishment and loss of professional licensing.