The Ultimate Managing Student Loans Quiz

Estimated Completion Time
3 min
The Ultimate Managing Student Loans Quiz
Image: iStockphoto.com/Catherine Yeulet

About This Quiz

Financing your education with student loans is a long-term future obligation and should not be done without careful consideration. Many students take on large amounts of debt without being aware of the consequences. Knowing as much as you can about your student loans will help you decide how much debt is reasonable for you. Take this quiz and see how educated you are about managing student loans.
During 2008, what percentage of students in the U.S. took out loans for school?
46 percent
56 percent
66 percent
Correct Answer
Wrong Answer

A total of 66 percent of students in the U.S. borrowed money for college.

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What is a grace period?
The time period you do not need to make loan payments.
The time period when loans do not accrue interest.
The time period over which loans are repaid.
Correct Answer
Wrong Answer

Loans are in grace for the time you are a student plus a specified time after graduation. During a grace period, you do not need to make loan payments.

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In the U.S., when do unsubsidized Federal Student Loans start accruing interest?
when debt goes into repayment
when the loan is awarded
when the grace period ends
Correct Answer
Wrong Answer

Unsubsidized Federal Student Loans start accruing interest the moment you take out the loan.

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When do subsided Federal Student Loans start accruing interest?
when the loan is dispersed
when the loan is paid off
after graduation
Correct Answer
Wrong Answer

Subsidized loans start accruing interest after graduation.

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In the U.S., what is the National Student Loan Data System?
a list of available funds for borrowing
a system that provides information about your debt
a list of students in default on their loans.
Correct Answer
Wrong Answer

The system provides information on your student debt principal and interest amounts.

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What is the standard repayment plan?
fixed payment over 10 years
fixed payment over 12 years
fixed payment over 20 years
Correct Answer
Wrong Answer

The standard repayment plan is a fixed monthly amount over a 10-year period. It is very important to make all your payments by the due date.

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Is it possible to repay the loan over a longer period than 10 years?
The only payment period is 10 years.
You may pay over 12 to 30 years.
You may pay over 40 years.
Correct Answer
Wrong Answer

You may select an extended payment plan for between 12 to 30 years. Be aware that additional interest charges from selecting an extended plan will increase the total amount you must repay when compared to the 10-year repayment.

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If I get a big salary bonus, how much of my student loan may I pay early?
You may pay early up to 20 percent of the loan balance.
You may repay any amount of your student loan early with no penalty.
You may not pay your loan early.
Correct Answer
Wrong Answer

Usually there is no prepayment penalty, so pay as much as you like as early as you can. Congratulations on doing so well at your job!

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How do federal loan rates compare to credit card rates?
Federal Student Loan interest rates are usually lower.
Federal Student Loan interest rates are usually the same as credit cards.
Federal Student Loan interest rates are usually higher than credit cards.
Correct Answer
Wrong Answer

Federal Student Loan rates may accrue a lower interest rate than your credit cards. Do not be tempted to pay your higher interest credit card debts instead of your student loans.

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What should you do if you cannot pay your student loan?
Apply for forbearance.
Apply for deferment.
both answers
Correct Answer
Wrong Answer

If you are having a tough time, find out if you will qualify for a forbearance or deferment. Contact your lender as soon as possible.

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How does working as a full-time teacher help repay student loans?
Teachers earn large salaries.
Teachers may qualify for loan forgiveness.
Teachers may qualify for grants.
Correct Answer
Wrong Answer

Full-time elementary and secondary school teachers may be eligible for loan forgiveness. There are some stipulations, so you will need to inquire with your school's financial aid office or lender.

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If I go into bankruptcy, what happens to my student loan?
It remains due.
It will be decreased.
It will be cancelled.
Correct Answer
Wrong Answer

Student loans are not usually discharged by bankruptcy.

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How can I consolidate my education loans?
Contact the U.S. Department of Education.
Contact your lender.
both answers
Correct Answer
Wrong Answer

Consolidating your loans will put all the loans together in one repayment package, making it easier to keep track of different loans from different lenders. The U.S. Department of Education and your lender will help you with consolidation services.

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If I consolidate my loans, what will be the interest rate?
your lowest interest rate
your highest interest rate
the average interest rate
Correct Answer
Wrong Answer

Consolidating uses the average interest rate of all the loans.

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Can I deduct my student loan payments from my income tax?
You may deduct the total yearly payment.
You may deduct the interest portion only.
You may deduct the principal portion only.
Correct Answer
Wrong Answer

That would be wonderful, but only the interest portion of the payment is deductible.

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How does defaulting on a student loan affect my credit rating?
It will cause no change in your credit rating.
It will significantly lower your credit rating for a short time.
It will significantly lower your credit rating for many years.
Correct Answer
Wrong Answer

Defaulting will lower your credit rating significantly for many years.

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What is forbearance?
Payments temporarily stop.
Payments temporarily decrease.
both answers
Correct Answer
Wrong Answer

Forbearance is a temporary stop of payments or a decrease in the payment amount. To qualify, your debt must be greater than 20 percent of your gross income.

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How do you qualify for a loan deferment?
a student in school
unemployed or experiencing an economic hardship
both answers
Correct Answer
Wrong Answer

Loans may be deferred while you are in school, if you are unemployed or having an economic hardship. Contact your lender for more information.

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What can you do to decrease the amount of student debt you will need for school?
Apply for academic scholarships.
Apply for sports scholarships.
both answers
Correct Answer
Wrong Answer

One way to decrease the amount of needed debt is to be awarded college scholarships. Schools offer many academic and sports scholarships to entice top students to attend.

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Are there loan forgiveness programs for graduate school debt?
absolutely not
absolutely yes
for certain situations
Correct Answer
Wrong Answer

If you are a doctor or lawyer, you may qualify if you work in specific lower-paying positions. Ask your school's financial aid officer.

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You Got:
/20
iStockphoto.com/Catherine Yeulet