DECA 2
What is an origination fee on a loan?
A fee that is charged by a lender to make up for the cost that they spend giving you a loan.
What happens when you refinance a student loan?
A lender pays off your existing loan and offers a new loan with a different interest rate, payment schedule and terms.
What is a parent loan?
A loan that is taken out for your education by a parent or guardian and they are responsible for paying it back.
For student loans that require a cosigner, who is that person?
A parent or guardian who shares the responsibility of the loan with you.
What is an origination fee on a loan?
A percentage of the loan that is charged to cover the cost of giving the loan.
Which of the following is an example of how high student loan debt can impact a person's life decisions?
A person may choose to rent instead of buying a home since they can't afford a down payment.
Which of the following is an example of how high student loan debt can impact a person's life decisions?
A person may choose to use public transportation instead of buying a car since they can't afford a down payment.
What is a loan forgiveness program?
A program that reduces or wipes away the amount of your loan if you are eligible.
What is an annual percentage rate (APR)?
Additional costs paid each year in order to borrow money in loans, including both interest and fees.
Which of the following may not make you eligible for loan forgiveness?
Being in an entry-level position for 2-3 years
Which of the following is not an example of how you can reduce the full cost of higher education?
Buy all books at the bookstore as early as possible.
Which statement best describes how federal student loans are different than private student loans?
Federal loans always have a fixed interest rate and you qualify regardless of your credit score.
Why is it possible that you may get less money than the loan amount you have borrowed?
Fees can be subtracted from the borrowed amount.
What do you need to submit in order to access need-based federal aid and federal loans?
The FAFSA
When determining how much money to borrow in loans to pay for your higher education, which of the following items should not be considered?
The interest rate of the loan.
Which is an example of why higher education typically has a positive return on investment (ROI)?
The jobs you can get with higher education will earn more money than jobs without a degree or certificate.
What is the difference between a parent loan and a loan that your parents or guardians cosign with you?
The responsibility of a parent loan is solely on them but a cosigned loan means you share the responsibility.
Which type of interest can change over the life of a loan?
Variable interest
In order to qualify to refinance a student loan, you will need _____.
a good credit score and good income-to-debt ratio
Buying used textbooks, cooking your own meals and biking instead of driving can all reduce the _____.
full costs of higher education
Taking more than four years to graduate will increase costs and may impact a return on investment. What could you check to see how long most students take to finish at an institute of higher education?
graduation rate
Which type of loan has a higher borrowing limit, a subsidized or unsubsidized loan?
Unsubsidized loan
Private student loans are from _____.
financial institutions like banks and credit unions
Opportunities to reduce or wipe away part of a loan amount based on your public service or by being a teacher in a low- income public school are called_____.
forgiveness programs
The biggest difference between scholarships and loans is that scholarships are considered _____ but loans must be paid back.
free money
When paying for higher education, scholarships and grants can be considered _____.
free money
The _____ shows how long the average student takes to earn a degree and this can be helpful in determining the return on investment at different institutions.
graduation rate
A net price calculator _____.
helps estimate the amount of money you might get in scholarships and grants
If you want to pay less interest over the life of your loan, you should make a _____ monthly payment.
high
The shorter a loan's term, the _____.
higher the monthly payment but less interest paid over the life of the loan
When creating a budget to repay your student loans, you should plan to pay back _____.
interest and principal
A positive return on investment for higher education _____.
is when your earnings potential is higher than the cost of your education
Higher education typically has a positive return on investment because _____.
jobs and careers that require a degree or certificate generally earn higher salaries check
When paying for higher education, money that you borrow and must pay back later comes from _____.
loans
Loans are different from scholarships and grants since ____.
loans must be paid back
Having a high debt-to- income ratio or defaulting on your loan can bring down your credit score. A low credit score on your credit report can _____.
make it much harder to borrow money in the future
Which institution will most likely have the lowest sticker price?
A certificate program
Who would most likely be a cosigner on some student loans?
A parent or guardian
What are the additional costs you pay each year in order to borrow money in loans? This includes both interest and fees.
Annual percentage rate (APR)
Which of the following is not an example of how you can reduce the full cost of higher education?
Eat at restaurants and fast food places regularly.
How often do you need to fill out the FAFSA in order to apply for federal student loans?
Every year
How often do you need to apply for a federal student loan?
Every year
When do you need to apply for a federal student loan?
Every year, based on the deadline for your state
What do the initials EFC mean?
Expected Family Contribution
What is considered by the federal government to be what your family will be able to pay per year toward your school expenses?
Expected Family Contribution (EFC)
True or false? When creating a budget to repay your student loans, you can save money by paying only the interest.
False because paying only interest lengthens the life of the loan and increases the total amount you pay in the long-term.
If Gabi wants to pay off her student loan by starting with a low amount and then increasing it every two years, what type of repayment plan is best for her?
Graduated repayment plan
If you are looking for information about financial aid at many different institutes of higher education, who should you contact?
High school counselor
When researching financial aid options, who should you contact first?
High school counselor
Who is most likely to have general information about financial aid at many different institutes of higher education?
High school counselor
One consequence for defaulting on a loan is to have your wages garnished. What does this mean?
Money is taken directly out of your paycheck to cover your debt.
Which resource would not have reliable information about student loans?
Money wiring agency
When using the 50- 30-20 rule to budget, what category are loan payments in?
Needs
Jeremiah works at a pet store. He went to a community college but didn't finish. He has some student loans now. What kind of return on investment (ROI) does Jeremiah demonstrate?
Negative ROI
Which is an example of an income-driven repayment plan for student loans?
Payment amounts are based on a percentage of what you earn.
Anna got a high-paying job as a lab technician upon graduation. She took five years to graduate from a public university and did take out a lot of loans. What kind of return on investment (ROI) does Anna demonstrate?
Positive ROI
Luis repairs air conditioners. He earned a certificate in 6 months and paid for it with one loan. He earns a good salary now and will pay off his loan in two years. What kind of return on investment (ROI) does Luis demonstrate?
Positive ROI
When creating a budget to repay your student loans, what do you need to pay in order to fully pay it off?
Principal and interest
Which statement best describes how private student loans are different from federal student loans?
Private loans can have fixed or variable interest rates and there are many options for paying them back.
Which type of loan is based on financial need?
Subsidized loans
If a person qualifies, why is it better to accept a subsidized loan before an unsubsidized loan?
The accrued (or added) interest on a subsidized loan is paid by the Department of Education while you are enrolled at least half time. check
Along with the amount of financial aid, which is the most important to pay attention to when trying to determine financial aid costs in relation to your personal budget?
The actual cost of attendance
Which of the following is not a good reason to refinance a student loan?
You are about to move to a new home
Which of the following is not true if you default on a student loan?
You will have your degree taken away.
A percentage of the loan that is charged to cover the cost of giving the loan is known as _____.
an origination fee
The _____ is the additional costs you pay each year in order to borrow money in loans, including both
annual percentage rate (APR)
Subsidized loans are different from other types of loans because they _____.
are based on financial need
High student loan payments can impact all of the following life decisions except _____.
being able to afford food
Choosing the higher education institution with the cheapest sticker price might be a bad idea because _____.
more expensive schools may be cheaper once the net cost has been determined
Taking care of your _____ first is a good budgeting strategy that includes covering your loan payments.
needs
Scholarships, grants and work-study money all reduce the _____ of higher education.
net cost
A _____ can help you estimate how much money you might get in scholarships and grants at a given institution of higher education
net price calculator
Financial aid letters show your aid and costs of attendance for _____.
one year
A(n) _____ is a percentage of the loan that is charged to cover the cost of giving the loan.
origination fee
If your earning potential is higher than the cost of your higher education, you will have a _____.
positive return on investment for higher education
Financial aid letters from institutes of higher education show your yearly aid and costs for attending. This means that you will need to_____.
reapply for aid every year
Researching the average earnings by major and by career can help you determine the _____ of an institute of higher education.
return on investment
The type of loans that are based on financial need are _____.
subsidized loans
To access need-based federal aid, including federal loans you will need to submit _____.
the FAFSA
When determining how much money you will need to borrow in loans for each year of your higher education, you need to take into account _____.
the amount of money you will still need after subtracting scholarships, grants, work study, and personal and family contributions
Federal loans are from _____.
the government
The full cost of attendance to an institute of higher education, including tuition, room and board, books and other costs is known as _____.
the sticker price
What do you need to complete in order to qualify for a federal student loan?
The FAFSA
If a school is offering a lot in financial aid, what else do you need to consider when trying to determine if a school is going to fit your budget?
Cost of Attendance (COA)
What are you calculating if you add together an estimate of tuition, fees, room and board, books, supplies and other higher education expenses?
Cost of Attendance (COA)
What do you need to consider to decide if you can afford to go to an institute of higher education?
Cost of Attendance (COA) and financial aid
Which type of interest does not change over the life of a loan?
Fixed interest
What does Expected Family Contribution (EFC) mean?
How much the federal government expects your family will be able to contribute per year toward your school expenses.
Why would you need a cosigner for certain student loans?
If you don't have a credit history, a cosigner's credit score will be used to secure certain student loans.
If Alejandro wants to pay off his student loan by basing it on how much he is earning at his job after graduation, what type of repayment plan is best for him?
Income-driven repayment plan
Which of the following terms is a percentage of the loan that you pay on top of what you have borrowed?
Interest
Why would researching the average earnings by major and by career be useful to you as you choose an institute for higher education?
It can help you calculate the return on investment.
How could defaulting on a loan or having a high debt- to-income ratio impact your future opportunities?
It can lower your credit score and make it difficult to borrow money for big purchases like a house or car.
Having a high debt-to- income ratio or defaulting on your loan can bring down your credit score. How can a low credit score on your credit report affect you?
It can make it much harder to borrow money in the future.
How is cost of attendance (COA) determined at an institute of higher education?
It is an estimate of tuition, fees, room and board, books, supplies and other expenses.
What happens if you don't pay back a cosigned loan on time?
It will impact your credit score and the credit score of the parent or guardian who cosigned with you.
Which method of funding higher education accrues interest until it is paid back?
Loans
Why is it important to consider loans last when paying for higher education?
Loans need to be paid back but scholarships and grants are free money.
Which resource would not have reliable information about student loans?
Teller at a financial institution
Are net costs or sticker prices lower for higher education and why?
Net costs are lower since they include all scholarships, grants and special program financing.
Why are net costs of higher education different from sticker prices?
Net costs include all scholarships, grants and special program financing.
Does an offer of more grants and scholarships mean one school is cheaper than another school?
No, financial aid offers have to be subtracted from a school's cost of attendance to determine how affordable a school is.
What's the best advice to give to a student who says: "It's easy to determine which school is more affordable; just look at how much financial aid they give you!"
Not true! Financial aid offers have to be subtracted from a school's cost of attendance to determine how affordable a school is.
Which statement is true regarding how private and federal loans use your credit score (borrowing history) when approving applications?
Only private loans look at your credit score.
Which is an example of an extended repayment plan for student loans?
Payments are low and can last up to 25 years.
Which of the following should you consider first when trying to pay for higher education?
Scholarships and grants
Which of the following are considered "free money" when it comes to financing higher education?
Scholarships and grants
Why is it important to consider scholarships and grants before loans to pay for higher education?
Scholarships and grants are free money that do not need to be paid back.
When applying for the FAFSA, which of the following is not true?
Since it is a federal application, there is one application deadline for the entire country.
If Emmett wants to pay off his student loan by making monthly payments for 10 years, what type of repayment plan is best for him?
Standard repayment plan
Which type of loan has the accrued (added) interest paid for by the Department of Education while you are enrolled at least half-time in an institute of higher
Subsidized loan
If you are comparing the financial aid letters from two higher education institutions, how can you determine which one is more affordable?
Subtracting the financial aid offer from the cost of attendance will help you determine which one is more affordable.
Why would finding graduation rates be helpful in determining an institution's return on investment?
Taking more than four years to graduate will increase costs and may impact return on investment.
Who would not have reliable information about student loans?
Tax accountant
How does a loan's term, or number of years to repay a loan, affect your monthly payments and amount owed?
The shorter the term, the higher your monthly payment but the less interest over the life of the loan.
Which of these is not something to consider when trying to get a positive return on investment (ROI) for higher education?
The type of food that is offered on the meal plan.
Which of the following is true about financial aid letters from institutes of higher education?
They only include aid for one year. You must reapply for financial aid every year.
What is the purpose of the FAFSA?
To access need-based federal aid, including federal loans
What are two ways that can help you keep a budget while trying to reduce debt load from loans?
Tracking expenses and evaluating spending
If you calculate the cost of attendance (COA) at an institute of higher education, what are you including?
Tuition, fees, room and board, books, supplies and other expenses.
Why would researching the average earnings by major and by career be useful to you as you choose an institute for
You can anticipate the return on investment based on how much you could earn.
One consequence for defaulting on a loan is having your transcript withheld. How could this affect you as you graduate?
You may not get a job that requires a transcript.
One consequence for defaulting on a student loan is loan acceleration. What does this mean?
You owe the amount of your loan and interest immediately.
If you borrow $10,000 with a 1% origination fee of $100, how will it affect the amount of loan money you receive and how much you must pay back later?
You receive $9,900, but must pay back the full $10,000 later.
How can attending a community college help create a positive return on investment for higher education?
You spend less money the first 2 years and then transfer to a 4 year institution.
Which of the following is not true if you default on a student loan?
You will have your passport taken away.
Which of the following is not true if you default on a student loan?
You will not be allowed to open any bank accounts or make investments.
The FAFSA is unlike other financial aid applications because ____.
each state has its own deadline and you need to apply every year
Jobs and careers that require degrees or certificates generally _____ jobs that require little or no training.
earn more money than check
The sticker price of an institute of higher education includes _____.
tuition, housing, food, books and other costs check
Question Response The amount of money you will still need after subtracting scholarships, grants, and work study will help determine the amount of money _____.
you need to borrow in loans or pay out of pocket