STUDENT LOANS EXAM QUESTIONS
WITH CORRECT ANSWERS (SHORT
TEST)
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.
Award Letter - Answer-A letter from your school that details your federal, state,
institutional and private student financial aid
Borrower - Answer-The individual who signed and agreed to the terms in the promissory
note and is responsible for repaying a loan. For a federal student loan, the student is
solely responsible for the loan.
Capitalized Interest (Capitalization) - Answer-Unpaid interest that has been added to the
principal balance of a federal student loan. If you don't make interest payments on your
unsubsidized loans while you are in college, that interest will be capitalized.
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.
WITH CORRECT ANSWERS (SHORT
TEST)
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.
Award Letter - Answer-A letter from your school that details your federal, state,
institutional and private student financial aid
Borrower - Answer-The individual who signed and agreed to the terms in the promissory
note and is responsible for repaying a loan. For a federal student loan, the student is
solely responsible for the loan.
Capitalized Interest (Capitalization) - Answer-Unpaid interest that has been added to the
principal balance of a federal student loan. If you don't make interest payments on your
unsubsidized loans while you are in college, that interest will be capitalized.
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.
