Financial Aid

Ready to test your knowledge? You'll have ten multiple choice questions to answer. Click on each question to reveal the question and multiple choice answers. After you've completed answering all ten questions, click "Grade Me!" at the end of the quiz to see how you did.

Question 1

When going through the financial aid qualification process, "EFC" stands for?

(A) Earnings, Finances and Cost	Correct Incorrect
(B) Earning for College	Correct Incorrect
(C) Estimated Financial Cost	Correct Incorrect
(D) Expected Family Contribution	Correct Incorrect

The Expected Family Contribution (EFC) is a formula established under Federal law that is used to measure your family´s financial health for purposes of awarding financial aid. EFC uses your family´s taxable and nontaxable income, accumulated assets, and benefits (such as unemployment or Social Security) as part of the EFC calculation.

Question 2

The application used by nearly all colleges and universities to determine eligibility for federal, state, and college-sponsored financial aid is known as?

(A) Expected Family Contribution (EFC)	Correct Incorrect
(B) Free Application for Federal Student Aid (FAFSA)	Correct Incorrect
(C) 529 Plan	Correct Incorrect
(D) The Coverdell form	Correct Incorrect

FAFSA, or the Free Application for Student Financial Aid is used by nearly every college and university in making financial aid decisions. Although it has gone through reviews and updates since its inception, FAFSA was first introduced as a result of the Higher Education Amendments of 1992. FAFSA merged the previously used Pell Grant Formula with the Congressional Methodology to yield the Federal Methodology (FM).

Question 3

Which of the following ARE NOT advantages of Federal student loans over private student loans?

(A) They provide flexible repayment and deferment options, including income-based repayment.	Correct Incorrect
(B) You don't need to get a credit check for most federal student loans.	Correct Incorrect
(C) Federal loans can be consolidated into a Direct Consolidation Loan.	Correct Incorrect
(D) Federal Loans have interest rates and fees that are determined by the lender and often depend on your credit rating.	Correct Incorrect

Interest rates on Federal student loans are set by Congress and are the same for all students receiving either subsidized on unsubsidized student loans. Rates will be different for subsidized versus unsubsidized loans, with subsidized loans being awarded based on financial need. There are also different rate structures for undergraduate and graduate loans. Credit checks are not required. Rates for federal loans are set in the spring for loans to be used in the upcoming award year. Each loan has a fixed interest rate for the life of the loan and offers different and flexible repayment methods. Multiple loans can be consolidated into a single loan for repayment.

Question 4

Which of the following type of student loan is subsidized by the federal government?

(A) Stafford Loan	Correct Incorrect
(B) Perkins Loan.	Correct Incorrect
(C) Private Loans	Correct Incorrect
(D) Both Stafford and Perkins Loans	Correct Incorrect

Stafford and Perkins student loans are the two main types of federal student loans. They´re often awarded to students at the same time, and have a few similarities.

Stafford Loans are awarded to eligible undergraduate and graduate students who are enrolled at least half-time. Subsidized Stafford Loans are awarded based on financial need, and the federal government pays the interest which accrues. Unsubsidized Stafford Loans are awarded to eligible students without regard to their economic need, but the student is responsible for paying all interest.

Perkins Loans are awarded to full- or half-time undergraduate and graduate students based on financial need. These loans are made through the school you´re attending, and are repaid to the school. The interest rate on these loans varies, and the repayment term is generally ten years.

Question 5

Which of the following types of Federal financial aid does not have to be repaid?

(A) Pell Grant	Correct Incorrect
(B) Stafford Loan	Correct Incorrect
(C) Perkins Loan	Correct Incorrect
(D) All of the above	Correct Incorrect

A Federal Pell Grant, unlike a loan, does not have to be repaid. Pell Grants usually are awarded only to undergraduate students who have not earned a bachelor´s or a professional degree. Grant amounts can change annually and are based on your financial need, cost of attendance, full-time or part-time student status, and your plans to attend school for a full academic year or less. Both Perkins Loans and Stafford Loans are Federal loan programs that require repayment.

Question 6

What is the current aggregate total Stafford loan limit for unsubsidized loans for dependent undergraduate students?

(A) $1,500	Correct Incorrect
(B) $5,500	Correct Incorrect
(C) $31,000	Correct Incorrect
(D) $224,000	Correct Incorrect

There are limits on the amount of subsidized and unsubsidized loans that undergraduate students are eligible to receive for undergraduate and graduate study. These are aggregate loan limits. The current limit is $31,000, with no more than $23,000 of subsidized loans. If the total loan amount you receive over the course of your education reaches the aggregate loan limit, you are not eligible to receive additional loans.

Question 7

What is the maximum amount that can be borrowed annually by a parent of a dependent undergraduate student under the Direct PLUS loan program?

(A) $5,500	Correct Incorrect
(B) $10,500	Correct Incorrect
(C) $12,500	Correct Incorrect
(D) The cost of attendance (determined by the school) minus any other financial assistance received.	Correct Incorrect

The Direct PLUS loan program allows eligible parents and dependent students to borrow amounts necessary to cover the cost of attendance minus any other financial assistance received. Cost of attendance is set by the school.

Question 8

The Federal Work Study Program may result in your student being employed by the following types of employers?

(A) The educational institution itself.	Correct Incorrect
(B) A federal, state, or local public agency.	Correct Incorrect
(C) A private for-profit organization.	Correct Incorrect
(D) All of the above.	Correct Incorrect

The Federal Work-Study program provides part-time jobs for undergraduate and graduate students who have demonstrated financial need. It allows them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study. Both on campus and off campus opportunities are often provided. On campus opportunities are usually offered by the school, while off campus opportunities are usually offered by private nonprofit organizations or a public agencies. All work performed under the Work Study program must be in the public interest.

Question 9

A great place to look for scholarship opportunities would be?

(A) The school you're planning on attending	Correct Incorrect
(B) Your parents' employer.	Correct Incorrect
(C) Local philanthropic organizations, banks and credit unions.	Correct Incorrect
(D) All of the above.	Correct Incorrect

US News & World Reports lists five best places to look for financial aid. Those include your school, local library, employers and free online scholarship searches. Additionally, community organizations such as the Boy Scouts or Girl Scouts and 4-H Clubs often offer scholarship programs, as do your local bank or credit union.

Question 10

Which of the following types of student loan repayment terms would result in you paying the least?

(A) Payments are a fixed amount for up to 10 years.	Correct Incorrect
(B) Payments are lower at first and then increase for up to 10 years.	Correct Incorrect
(C) Payments may be fixed or graduated with a repayment period of 12-25 years.	Correct Incorrect
(D) They're all the same.	Correct Incorrect

For all loan programs, interest is paid or accrues based on the outstanding loan balance and interest rate. The quicker you lower that loan balance, the less interest you´ll pay over the term of the loan. Assuming the same interest rate, shorter term loans will cost less than longer term loans because your loan balance will decrease more rapidly.

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