STUDENT LOANS EXAM QUESTIONS WITH CORRECT ANSWERS (SHORT TEST)

STUDENT LOANS EXAM QUESTIONS WITH CORRECT ANSWERS (SHORT TEST) Disbursement - Answer-A portion of a federal student loan that the school pays out by applying the funds to the student's school account or by paying the borrower directly. Students usually receive more than one of these, usually before each semester. Grace Period - Answer-A period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and ends on the day before the repayment period begins. A borrower is not required to make payments during this time. Loan Fee (Origination Fee) - Answer-A fee charged for each federal student loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). It is deducted proportionately from each disbursement of your loan. So, a $5,000 student loan with a 4% origination fee will provide you with a disbursement of $4,800. Loan Servicer/Federal Loan Servicer - Answer-An entity that collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a federal student loan on behalf of a loan holder. If you have a Direct Loan, you will be assigned one of these. Master Promissory Note (MPN) - Answer-A legal document in which you promise to repay your federal student loan(s) and any accrued interest and fees to your lender or loan holder. There is one of these for Direct Subsidized/Unsubsidized Loans and a different one for Direct PLUS Loans, Perkins Loan - Answer-A loan for students with exceptional financial need which is available at over 1,700 schools. PLUS Loan - Answer-For eligible graduate or professional students and eligible parents of dependent undergraduate students to help pay for the cost of the student's education at participating schools Principal - Answer-The loan amount you borrow plus any capitalized interest. Subsidized Loan - Answer-A federal student loan for which in some cases, a borrower is not responsible for paying the interest while in an in-school, grace*, or deferment period. Unsubsidized Loan - Answer-A federal student loan for which the borrower is fully responsible for paying the interest regardless of the loan status. William D. Ford Federal Direct Loan (Direct Loan) Program - Answer-Student loans provided by the U.S. Department of Education to enable a student to pay for education after high school. Eligible students borrow directly from the U.S. Department of Education at participating schools. There are four different types of these loans. Fixed rate loan - Answer-A loan in which the interest rate does not change during the term of the loan. Aggregate loan limits - Answer-The maximum amount that a borrower can borrow during their undergraduate years. The current loan limit for the Direct Loan program for undergraduates is $31,000. Federal Loan application - Answer-The FAFSA (Free Application for Federal Student Aid) serves as the application for federal student loans Eligibility for Federal Student Loans - Answer-All students are eligible for unsubsidized federal student loans. Subsidized student loans are provided based on need. Accrue - Answer-To accumulate interest on a loan. ex. With an unsubsidized Direct Loan, you will be accruing interest while you are in school. Annual loan limit - Answer-The maximum federal student loan eligibility per academic year. For Direct Loans, loan limit is $5,500 for freshman, $6,500 for sophomores and $7,500 for juniors/seniors.