Dat Finance

Suzanne is getting ready to graduate, and found a job in Raleigh, NC as a Human Resources Representative, making $3,000 a month. What do most experts recommend as the maximum affordable range for Suzanne's monthly student loan payments?

$240 - $300. Using the 8-10 rule.

Isabella and James set a goal to save for a 20 percent down payment on a house costing around $175,000. How much money will they need to save each month if they want to accomplish this goal in seven years?

A 20 percent down payment on a $175,000 house equals $35,000. $35,000 divided by 84 months equals about $417 per month.

What is a Trojan Horse? A form of malware that causes damage to your computer. A tool that allows identity thieves to obtain credit card information as it is being processed at a store. Emails that appear to be from established enterprises that trick recipients into providing personal information. Thieves that steal credit card information by looking over someone's shoulder.

A Trojan Horse is a form of malware. It appears to be useful software but once it's installed or run on your computer, it causes damage.

Pre-Approved

A conditional offer stating you have been approved for a line of credit.

What is your credit report? A permanent record of your income and household size. A detailed account of your credit history. A record of every bill you paid or failed to pay since you've had a Social Security number. A list of all of your open credit card accounts.

A credit report documents your credit history, and includes identifying information, details about credit accounts and loans, bankruptcies, late payments and credit inquiries.

Which of the following is NOT a common type of credit card? Standard credit card. Specialty credit card. Reward program credit card. Custom credit card.

A custom credit card is not a common type of credit card.

Which of the following is an example of a medium-term goal? Emergency fund. Down payment on a house. Retirement savings. Next month's road trip.

A down payment on a house is an example of a medium-term goal.

Cash Advances

Allows you to use your credit card to borrow cash.

True or False: If you have serious financial troubles, bankruptcy will relieve you of your federal student loan obligation.

Bankruptcy does not relieve you of your federal student loan obligation.

Max has set a goal to create an emergency fund. He determined that his monthly expenses total $1,500. Based on recommendations, how much should Max save for his emergency fund?

Based on the recommendation to have six months' worth of expenses in savings, Max should save $9,000.

What is the first step you should take before borrowing student loans?

Before borrowing student loans, determine how much you will owe after your other financial aid has been applied.

Justin and Hannah are buying their first home. After finding the perfect home, they applied for a mortgage but were denied. What is the FIRST step Justin and Hannah should take to resolve the situation?

Before taking any other actions, Justin and Hannah should review their credit reports to understand what may have caused the denial.

Bridgette set a short-term goal to save for a down payment on a car. She has determined that she needs to save $2,400. She wants to accomplish this goal in six months. How much does Bridgette have to save each month to accomplish this goal?

Bridgette needs to save $400 each month in order to reach her goal of $2,400 in six months.

Which of the following savings methods have a fixed term and fixed interest rate? Money market account. Certificate of deposit. Mutual funds. Savings account.

Certificate of deposit.

Nicole notices her checkbook is missing. What is the FIRST thing she should do to avoid identity theft?

Contact her bank to notify them of the missing checks. If possible, provide the check numbers.

Kayla received an email stating her bank is updating its information. The email instructed her to respond with her legal name, address, Social Security number and account number so the bank can ensure her account is up to date. What should Kayla do?

Contact the bank directly to verify the legitimacy of the email.

Which of the following is an appropriate first step to take control of your debt? Get a new credit card. Ignore your bills. Create a budget. Spend more than you earn.

Create a budget.

What is a credit score used to determine?

Creditors use credit scores to determine if an individual qualifies for credit and the terms of credit, such as interest rates, length of repayment and penalties for late payment. Credit scores do not impact earnings potential on investments accounts.

David was turned down for a credit card. David has only two department store credit cards which were recently opened. He doesn't have a high balance on either card. What might be the reasons that David was turned down for the additional credit card?

David's credit score may have dropped due to the recent credit inquiries, and any late payments could have dropped his score even further. Also, it is possible that David doesn't have enough credit history to satisfy that particular creditor's requirements.

Based on David's estimated credit score what is the potential impact on being approved for a car loan if he applied today? 550

David's score is low, but there may be lenders who are willing to extend an offer for credit to him. However, David's offer likely will have less favorable terms.

What is debt-to-income ratio?

Debt-to-income ratio is the percentage of monthly gross income that goes toward paying a person's debts.

After how many days of nonpayment will your student loan be considered in default?

Default occurs after 270 days of nonpayment.

Which of the following terms means that you are late in making your scheduled loan payments?

Delinquency means you are late in making your student loan payments.

Joshua is ready to start the process to get out of debt. He is unsure what should be his first step and asks you for advice. What do you tell Joshua?

Determine the total amount of debt you owe.

Private education loans:

Education loans offered by private lenders can supplement federal funding if needed and provide additional funding when other sources of financial aid are not sufficient.

This table shows the financial aid Tyler has received notice of on his award letter. He has calculated that this is not enough to cover his expenses and would like to receive additional funding. What FREE resources should Tyler explore?

Free resources that Tyler should explore include private grants and scholarships, institutional or departmental scholarships and grants or scholarships from his parents' employers.

A good guideline to follow is that your student loan payments should not exceed what percent of your gross monthly income?

Generally, your student loan payments should not exceed 8 to 10 percent of your gross monthly income.

Which of the following situations may put you at risk for identity theft?

Giving out personal information over the phone, responding to an email with personal information and using a public computer to access your bank account information can all put you at risk for identity theft.

The ____________ is a period of time allowed before you are required to begin making payments on your student loans.

Grace period

What is it called when an organization, such as a lender, views your credit report as a result of you applying for new credit? Hard inquiry. Soft inquiry. Background check. Credit report review.

Hard inquiries are a result of applying for credit.

Which of the following is true about having a bad credit report?

Having a bad credit report can prevent you from renting an apartment, getting approved for a loan, landing a job and obtaining credit on reasonable terms.

Which of the following is considered a hidden cost?

Health insurance premiums, utility hookup fees, and necessary furniture and fixtures are all hidden costs.

Which of the following is an example of a SMART goal?

I will study at the library three hours per class, each week, during the upcoming term.

Ellen has a Direct Subsidized Loan balance of $16,000 and a Direct Unsubsidized Loan of $26,000. Based on the information in this table, which repayment plan should Ellen choose if she wants the lowest initial monthly payment?

If Ellen wants to select the lowest monthly payment, she should select the Pay As You Earn Repayment Plan.

Sara just got $500 for her birthday. She told you that she is just going to keep it in a safe place until next year when she graduates from college and needs things for her new apartment. What suggestions would you offer Sara?

If Sara deposits the $500 into a savings account, it will earn interest and it will be worth more in one year.

After Justin and Hannah were denied a mortgage, their dream home was sold to another buyer. How could Justin and Hannah better prepare to try again in the future?

If, after reviewing their credit reports, Justin and Hannah find inaccurate information, they should try to correct it before applying for credit again. Fixing negative items on their credit reports and regularly monitoring the reports also will help them avoid future problems.

If Ellen ignores her student loan payments because she is unable to pay, what may happen?

Ignoring her student loan payments could negatively impact Ellen's credit score, she could lose deferment and forbearance options, be denied other types of credit and her wages may be garnished.

Besides lenders, who can access your credit report?

Insurance companies, landlords and potential employers can access your credit report. Family members do not have access to your credit report.

Which of the following types of compounding interest will increase your savings the most over a period of time? Interest is compounded daily. Interest is compounded monthly. Interest is compounded quarterly. Interest is compounded yearly.

Interest is compounded daily.

Jason has used the net price calculator provided by his school, and after all of his financial aid is accounted for, he still will need approximately $3,000. Which of the following steps could Jason take to find additional funding?

Jason could research and apply for a private education loan to provide additional funding.

Jayden decided he should start thinking about his retirement. Which of the following savings methods would you recommend for Jayden?

Jayden should consider opening an IRA. IRAs allow for tax-deferred savings for retirement.

Jillian and her husband Paul plan to purchase a new home in the next five years. How much of a down payment should they ideally save? 5 percent. 10 percent. 15 percent. 20 percent.

Jillian and Paul should ideally save 20 percent for a down payment on a house.

Jordan is graduating from college next month and has started searching for her own apartment. What steps should Jordan take to ensure her credit history won't affect her getting approved for an apartment lease?

Jordan should order and review her credit report prior to applying for credit, especially when the credit decision impacts her basic living needs. She also should attempt to correct any errors in the report.

Borrowers who don't stay in touch with their lender or loan servicer are at higher risk for __________.

Loan default

Assume your credit card balance is $15,000, your interest rate is 18 percent and your minimum monthly payment is interest plus 1 percent of the balance. Using an online credit card calculator, determine the overall interest charges you would pay if only making the minimum monthly payment.

Making only the minimum monthly payment, you would pay $21,924.72 in interest charges before paying off the balance, and it would take you 37 years and eight months to do so.

In order for David to finance a car on more favorable terms, what should he do next? Stop using his credit cards to avoid late payments. Cancel his credit cards. Apply for car loans until he gets a good interest rate. Make regular payments on his credit card accounts and don't apply for additional credit until he's ready to purchase a car.

Making payments on time and in full is the only proven option David has to build his credit.

Marcus spent several years clearing fraudulent activity from his credit after his identity was stolen. What steps should he take in order to ensure his identity is protected from a second occurrence?

Marcus should obtain his credit report from one of the credit bureaus every four months, shred all documents with personal information printed on them, be cautious about sharing his personal information with anyone, and ensure his personal computer has the latest security software.

Matt is starting to set savings goals. Which of the following should be his first priority? Emergency fund. Down payment on a car. Down payment on a house. Child's college education.

Matt's first priority should be establishing an emergency fund.

Matthew wants to start saving for his retirement. He set this as a medium-term goal as he believes he can save $500,000 in 10 years. Matthew is 25 years of age and makes $45,000 annually. True or False: Matthew's expectations are realistic.

Matthew's goal is not realistic. Planning to save his entire income, and then some, is not an attainable goal.

Mike completed a worksheet that compares his monthly expenses to his monthly income. The results showed that he is spending more money than he is making. Which of the following statements apply to Mike's situation?

Mike is living beyond his means.

Which of the following is a true statement about the time value of money?

Money available today is worth more than the same amount at a future date and the longer you keep your money in savings, the more it will grow.

Which of the following is the term that describes the total amount of money you actually take home after all of the required withholdings and taxes have been subtracted from your pay?

Net income.

Tyler received a call from a credit card company stating that he is past due on his account. He is confused because he doesn't have a card with that company. A few days later, he received a letter in the mail stating a car that he doesn't own is going to be repossessed. What should Tyler do next?

Obtain information from the debt collectors who are contacting him.

To complete the FAFSA you will need all of the following EXCEPT:

On the FAFSA, you will not need to provide the mailing address you have while you are in school.

Which of the following are ways to begin establishing good credit? Pay off revolving credit cards in full. Pay bills on time and in full. Apply for many credit cards in a short period. Charge the maximum your credit card allows.

Pay bills on time and in full.

Which of the following factors accounts for the largest part of an individual's credit score? Amounts owed/available balance. Length of credit history. Payment history. Types of credit.

Payment history accounts for 35 percent of a person's credit score. Amounts owed/available balance accounts for 30 percent, and the length of credit history accounts for 15 percent while the types of credit makes up only 10 percent.

Which of the following are benefits of setting savings goals?

Peace of mind, accomplishing life goals, reducing the interest costs of major purchases and having a safety net for emergencies are all benefits of setting savings goals.

What do the proceeds from FICA support?

Proceeds from FICA support the Social Security and Medicare programs.

Based on your review of his budget, what would be the BEST advice for Michael in order to reduce his expenses?

Purchasing a subscription to stream movies while reducing entertainment and food expenses will help Michael reduce his expenses.

What factors should you take into consideration when choosing a savings method?

Rate of return, liquidity and fees should all be taken into consideration when choosing a savings method.

Which of the following do you need to do once you finish school to help stay on top of your student loans?

Remain in contact with your school and loan servicer, especially when your contact information changes.

Which of the following is a money-saving strategy?

Renting a DVD from a kiosk is much less expensive than going to the theater. Purchasing a health club membership, going to the mall and driving your car on campus are all unnecessary expenses.

Lucas is trying to determine the best way to save the $5,000 that he received from his grandmother as a graduation gift. He wants to be able to withdraw money whenever he wants without a fee. Which of the following savings methods would you recommend for Lucas?

Savings account.

Which of the following savings methods has a low interest rate and allows you to withdraw money whenever you want? Savings account. Certificate of deposit. Mutual funds. Bonds.

Savings account.

After reviewing their credit reports, Justin and Hannah learned their credit score is low due to frequent late payments, high credit card balances and too many lines of credit. What is the BEST next step for Justin and Hannah to improve their credit score?

Schedule an appointment with a credit counselor to begin planning on how best to get their credit back in order.

Which of the following types of debt is backed by collateral for repayment of a loan? Unsecured debt. Installment debt. Secured debt. Credit card debt

Secured debt.

Which of the following is considered part of the critical class of personal data?

Social Security numbers, credit card numbers and insurance policy numbers.

Which of the following is NOT an effective way to manage your budget?

Spend your next pay raise before you receive it.

Which student loan repayment option typically has the lowest cost over the life of the loan?

Standard Repayment offers fixed payments over 10 years, and offers the lowest interest costs of any of the repayment options.

Which of the following are federal student loan repayment options?

Standard, Graduated and Income-Based Repayment are all federal student loan repayment options. Other options include Extended, Income-Contingent and Pay As You Earn Repayment.

Which of the following is an example of unsecured debt? Car loan. Home loan. Student loan. Motorcycle loan.

Student loans are considered unsecured debt because they do not have an item of valued pledged as security.

Jacob applies for a credit card at a department store and is denied. He was a bit surprised because he thought he had pretty good credit. What is the first thing Jacob should do? Contact the major credit bureaus and ask to put a fraud alert in his file. File a police report. Take a look at his credit report to see why he was denied. File an identity theft report.

Take a look at his credit report to see why he was denied.

Tamara has set her savings goals and is now making regular contributions to her savings plan. She is concerned because she wants to ensure that her savings plan is successful. What suggestions would you offer her?

Tamara should conduct quarterly reviews of her progress toward her goals, ensure her savings account has a competitive interest rate, and review her monthly spending and saving to track her progress.

Whats is the rule of 72?

The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.

What is the name of the central database for federal student aid?

The central database for federal student aid is the National Student Loan Data System, or NSLDS.

Alison is excited to begin her college career, but she is worried about how expensive it may be. Which of the following resources could Alison use to get a realistic estimate of what her degree might cost?

The net price calculators for the schools she is considering.

Under which part of his pay stub will Anthony's new 401(k) deduction be listed?

The new 401(k) deduction will be listed under the "other deductions" part of the pay stub.

If Brittney makes $30,000 per year, what is the maximum amount she should spend on debt payments (excluding her housing costs) each month according to the recommended guideline?

The recommended guideline states you should not spend more than 15% of your income on debt payments (excluding housing costs), so Brittney should not spend more than $375 per month on debt payments.

Why should you verify that incorrect information is removed from your credit report?

The smallest error can result in credit denial, errors can be the result of identity theft, and can lead you to being required to pay higher interest rates. Errors on your credit report also can hurt your chances of getting a job offer.

Grace Period

The time between the issuing of a credit card statement and the corresponding due date.

What are needs?

Things for your everyday living and goal attainment.

The three major credit bereaus

TransUnion, Experian, Equifax

Direct Subsidized, Direct Unsubsidized and Perkins Loans offer you a grace period.

True

Karen is earning about $2,500 per month in her current job. Her six-month grace period is about to expire and she will need to begin making her student loan payment of $173 per month. True or False: Karen will easily be able to make her student loan payment based on her monthly income.

True

True or False: It typically is appropriate to accept more risk when choosing a savings method to satisfy a long-term goal.

True

True or False: Paying the interest on your student loans that are accruing interest while you are in school can significantly reduce your loan costs.

True

you're entitled to a free credit report every year

True

True or False: Criminals can steal identities by rummaging through trash looking for personal data.

True.

Your friend Alex has been diligently working to eliminate his debt. He tells you that his car just broke down and it will cost $750 to repair. Alex says he is feeling frustrated with his progress and is ready to give up. Which of the following is a common obstacle Alex might be facing?

Unexpected expenses are likely to occur.

Ellen has determined she is unable to pay the minimum payments on her student loans based on her current income. What is the BEST next step for Ellen in order to avoid late payments or defaulting on her student loans?

Various repayment options are available to borrowers who are unable to make minimum payments on their student loans. Ellen should call her lender to discuss repayment options.

Which of the following is an example of a want?

Video games.

If you are considering taking out a student loan to pay for your education, which of the following is the most important consideration?

You should borrow only as much as you will need for the year. Remember you do NOT have to accept the full amount of the loans listed on your award letter.

Which of the following is a true statement?

You should keep both secured and unsecured debt under control. Don't make purchases simply because they are good debt. You should adjust your spending habits if your monthly expenses exceed your monthly income.

Which of the following is an unsafe way to handle your personal information? Check your credit report regularly. Print out your Social Security number on your personal checks so you don't have to carry your card in your wallet. Shred bank statements and credit documents. Check that a website is secure prior to entering your personal information.

You should never print your Social Security number on your checks, nor should you carry your Social Security card in your wallet.

Your friends ask you to go on a cruise for spring break. A vacation sounds like fun, but you are worried that you will need to replace your car sometime soon. What are the best ways to respond to the invitation?

You should tell your friends that you appreciate the invitation, but you have other financial concerns, and ask if everyone would be interested in a less expensive trip closer to home.

Which of the following is an effective strategy when trying to reduce and eliminate debt?

getting a part-time job to increase your income, calling your lenders to see if they will negotiate interest rates or payment amounts and organizing your debt based on the amount owed and pay off the lowest balance first.

zero sum budgeting

when you assign every dollar you make a purpose

Ellen decides to change repayment plans. Which of the following is a consequence of Ellen not using the Standard Repayment option?

By changing repayment plans, Ellen will pay more interest over the life of her loans than she would on the Standard Repayment plan.

What are goals?

Desires and plans to achieve a specific outcome.

Mike is a recent college graduate and is creating a budget to reflect his new set of income and expenses. What is one of the first things Mike should do before he begins?

Determine his monthly income.

If you are having trouble paying off credit card balances, one responsible solution is to: Max out your current cards. Wager that you eventually will make enough money to pay off your debt. Develop a budget and stick to it. Get another credit card with a lower rate and transfer your balances to that card.

Developing a realistic budget that details your expected income and expenses then sticking to it is a responsible solution to credit card trouble.

Dianne just started her new job and noticed most of her co-workers dress conservatively. Having just graduated college, most of her wardrobe is casual. You know that Dianne has a tight budget. How would you advise Dianne regarding her work wardrobe?

Dianne should shop the sales rack or at second-hand clothing stores, buying only enough clothes for a work week.

True or False: With a monthly income of $3,000, Suzanne will be able to afford a monthly student loan payment of $298.

True 8-10 rule

True or False: The best way to stay out of debt is to prepare a personal budget.

True.

True or False: Your employer is not allowed to withhold money for FICA from your paycheck without your permission.

Your employer is required to withhold money for FICA from your paycheck.

True or False: Based on his gross annual income of $35,000 and student loan payment of $253, Anthony's monthly loan payment is within recommended guidelines.

Based on Anthony's income, his monthly loan payment is within recommended guidelines.

Michael wants to upgrade his phone, even though his current phone is only a year old. You know Michael has been neglecting some of his monthly debt payments because he is unable to afford them. In fact, he borrowed money from you last month to make his rent payment. How would you advise Michael regarding purchase of a new phone?

Because Michael is having trouble meeting his financial obligations, you should suggest that he not purchase a new phone until he can truly afford it.

When taking out a student loan to pay for your education, the most important consideration is to make sure:

make sure you are borrowing only the amount you need.

Your rights as a student loan borrower include which of the following?

the right to receive a copy of your Master Promissory Note, prepay all or part of your loan without penalty and defer payments for specified periods, if you qualify.

Which of the following are examples of items that can be withheld from your paycheck?

union dues, insurance premiums and contributions to savings or retirement plans.

After putting his budget together and reviewing his income and expenses, Adam realizes he is spending more than he makes each month. What recommendations would you offer Adam to help fix his budget?

Adam could invite friends over for a movie night, shop in bulk for food and home supplies, find a roommate and take his lunch to work.

Defaulting on your student loans can result in a variety of penalties, including which of the following?

Defaulting on your student loans can result in a variety of penalties including harming your credit history, denial of future financial aid, garnished wages and withholding of tax refunds.

What are two possible options to postpone your loan payments if you get into financial trouble?

Deferment and forbearance both temporarily postpone your loan payments. Deferment is a temporary suspension of loan payments for specific situations. Forbearance is a temporary postponement or reduction of payments during periods of financial difficulty.

Hannah has a Direct Subsidized Loan balance of $21,470. Based on the information in this table, what is a negative implication if Hannah selects the Graduated Repayment Plan instead of the Standard Repayment Plan?

She will pay more interest on a graduated loan

After putting together his budget, José realized he will have difficulty making his loan payments of $265 on the Standard Repayment plan. Based on the chart above, which repayment option will add the least amount of total interest cost while decreasing his monthly payment to a more manageable amount?

The Graduated Repayment option will add the least amount of total interest cost while still decreasing José's monthly loan amount.

José is planning to attend college in the fall and wants to apply for federal financial aid. What does José need to do to start the application process?

The first step in applying for federal financial aid is to complete the FAFSA.

Which of the following is an example of a need?

Food

Credit Limit

The maximum amount that can be charged on a credit card

Suzanne borrowed $24,000 in federal student loans. Of that, $7,000 is in the form of a Direct Unsubsidized Loan at 6.8 percent interest. She chose not pay interest on the unsubsidized loans during school and her grace period, which totaled 48 months. Use the Accrued Interest Calculator and determine the amount of interest that was accrued and then capitalized on Suzanne's unsubsidized loans.

$1904

Which of the following loans should you consider first after you have exhausted all of the money from scholarships, grants and work-study to pay for college?

Direct Loans

Karen has a Direct Subsidized Loan balance of $23,000. Based on the information in this table, what is a negative implication if Karen selects the Graduated Repayment Plan instead of the Standard Repayment Plan?

If Karen chooses the Graduated Repayment Plan instead of the Standard Repayment Plan she will pay more interest on her loans.

Which actions best help establish a good credit history?

Obtaining credit and paying your bills on time and in full are excellent ways to build credit. Opening a bank account and ensuring it isn't overdrawn can help establish credit.

A good first step to ensure that you have enough money to meet expenses each month is to:

You should first identify the sources and amounts of money you have to spend each month.

Which of the following are sources of financial aid that you do not have to repay?

Grants, work-study funds, scholarships

Which of the following represents the total amount of money that you earn from your job or other sources of income?

Gross income.

Amanda recently put together her first budget. She discovered that her monthly expenses exceed her income by $200. Which of the following options would help Amanda ensure that she can make her monthly payments and better manage her debt?

Amanda could better manage her debt by cutting unnecessary expenses so she can use any extra money towards paying off her debt. Amanda also could contact her creditors and try to negotiate a lower interest rate and more manageable monthly payment.

Andrew has determined he is unable to pay the minimum payments on his student loan based on his current income. What is the next BEST step for Andrew in order to avoid late payments or defaulting on his student loan?

Andrew should immediately call his loan servicer to discuss additional repayment options to avoid further late payments.

When Elaine entered college as a freshman, she met with her academic adviser to establish her school and career goals. Elaine continued to meet with her adviser each semester to ensure she was enrolled in the appropriate classes. Her adviser also helped her focus on action steps to meet her goals. Because of her hard work, Elaine graduated in four years. What did Elaine do right?

Elaine regularly met with her academic adviser, set school and career goals, focused on action steps to meet her goals, and took the classes that she needed in order to graduate in four years.

When deciding how much he can afford to borrow in student loans, Cody should consider what his monthly income will be when he graduates. Cody expects to make about $2,000 a month in his chosen occupation. Based on the recommended guidelines, what is the maximum monthly student loan payment that Cody will be able to afford?

Experts recommend that student loan payments do not exceed 10 percent of a borrower's monthly income

Which type of repayment option will allow you to reduce the amount of your monthly payment by spreading payments over a period of up to 25 years?

Extended Repayment allows you to spread your payments over a period of up to 25 years, although you will pay more in overall interest costs than with the Standard Repayment plan.

True or False: Free sources of financial aid, such as scholarships and grants, are solely based on financial need.

False

True or False: Your employer must have your permission before deducting federal income tax, Social Security or Medicare tax from your paycheck.

False

True or False: When researching potential starting salaries, a new graduate should expect to earn around the 50th percentile of a job's projected income.

False; When trying to estimate your potential earnings after graduation, it is important to look at entry-level salaries, which are usually around the 10th percentile.

When is the best time to file your FAFSA?

File the FAFSA as soon as possible after Jan. 1 of the year in which you are seeking financial aid. It also is important to pay attention to all state and institutional deadlines.

Your total monthly debt payments (excluding rent or mortgage) should not exceed _____ percent of your monthly gross income.

Financial experts recommend that your monthly debt payments, excluding rent or mortgage payment, should not exceed 15 percent of your monthly gross income.

If your gross monthly income is $2,000, what is the maximum amount you should spend on debt payments (excluding rent or mortgage) each month according to the recommended guideline?

Financial experts recommend that your monthly debt payments, excluding rent or mortgage, should not exceed 15 percent of your monthly gross income.

When creating a budget, Jim found that his spending exceeds his income. What should Jim do?

Find a way to either earn more money or reduce how much money he spends.

Scott wants to move into an apartment. The landlord runs a credit check and finds that Scott has a FICO credit score of 400. Which of the following are MOST likely to occur?

It is highly unlikely that Scott will get approved for his apartment lease due to his low credit score.

Which of the following is NOT a benefit of using credit cards wisely? Credit cards provide a record of purchases to help track spending. Credit cards provide opportunities to establish a record of on-time payments. Credit cards provide a good way to buy items you otherwise cannot afford. Credit cards may provide emergency funds

It is not a wise idea to use credit cards to buy items you otherwise cannot afford.

Emily has decided on the school she will be attending. Which of the following steps should she take to ensure she receives the financial aid listed on her financial aid award letter?

It's important that Emily reads the award letter and follows the instructions carefully.

Jason is unhappy with his math class grades and realizes that he needs to study more. What steps would be helpful for him to take?

Jason should take action steps, including scheduling time each day to study, meeting with a study group and finding a tutor, in order to meet his goal of studying more and raising his grade.

John is applying for a mortgage, and his lender is checking his credit score. Which of the following factors will NOT affect John's credit score? How long he has had credit. How much credit he has available. John's income. Types of credit he has been given.

John's income will not affect his credit score.

José has a Direct Subsidized Loan balance of $23,000. Based on the information in this table, what is a negative implication if José selects the Graduated Repayment Plan instead of the Standard Repayment Plan?

José will pay more interest on his loans.

Justin received his first paycheck. When creating his budget, should Justin use gross or net pay to determine how much money he has available to spend each month?

Justin should use his net, or take-home, pay to determine how much money he has available to spend each month.

Based on the information presented in the chart above, which of the following are advantages of the Standard Repayment plan versus the other available repayment plans? Check ALL that apply:

On Standard Repayment plan, borrowers typically will pay less interest, making their total amount paid less than the other available repayment options.

Which of the following activities can lower your credit score? Opening a bank account. Paying your utility bills on time. Using your savings to pay off credit card balances. Opening several new credit card accounts in a short period of time.

Opening several new credit accounts in a short period of time can have a negative impact on your credit score, as each credit inquiry can lower your score.

This repayment option typically is the least expensive in terms of total interest costs and is the choice of most federal education loan borrowers. This plan provides a fixed monthly payment of at least $50 over a 10-year period.

Standard Repayment typically is the least expensive in terms of total interest costs and is the choice of most federal education loan borrowers.

Which of the following should you keep in mind when taking out a student loan?

Student loans have to be paid back with interest. Get all the grants and scholarships you can prior to taking out student loans. Borrow only what you need.

Which of the following options are available to students who are experiencing temporary difficulty in repaying their student loans? Check ALL that apply:

Students who experience temporary difficulty repaying their student loans have several options including deferment and forbearance and the Graduated, Income-Contingent, Extended, Income-Based and Pay As You Earn repayment plans.

Marie likes to stop each morning for coffee on her way to class. After looking at her income and expenses, she decides that she needs to cut back on her spending. If Marie makes coffee at home each morning and brings it with her in a travel mug to class, which money-saving strategy is she using?

Substitution strategy.

APR

The interest rate charged on credit card balances expressed as a single percentage which represents the yearly costs of the borrowed funds.

Minimum Monthly Payment

The least amount that you can pay and keep your account in good standing each month.

What are the TWO major reasons why students fail to receive financial aid?

They fail to fill out the forms properly They fail to meet application deadlines

What are wants?

Things that are nice to have and gratify some desire or urge.

Ellen just graduated from college and is in the grace period before she needs to begin making monthly student loan payments. Which of the following steps should she take in order to be well prepared to make her loan payments?

To be well prepared for student loan repayment, Ellen should determine when her grace period will end, know how to contact her lender or loan servicer and determine the outstanding balance of her loans.

Samantha just graduated from college and is in the grace period before she needs to begin making monthly student loan payments. What steps should she take in order to BEST prepare to make her loan payments?

To prepare for loan repayment, Samantha should create a budget; place the loan payment amount in a savings account each month; ensure that the loan servicer has her current contact information; and choose the most favorable repayment plan for her situation.