Loans Exam

Cost of Attendance

The annual cost advertised by the school, before financial aid is applied.

Direct Costs

Expenses that are billed to your student account and paid directly to the school

Direct Unsubsidized

A federal student loan available for undergraduate, graduate, and professional students which offers a low, fixed interest rate and flexible repayment terms.

Grants/Scholarships

Aid given based on need/merit; does not have to be paid back

Federal Work-Study

Federally-funded part-time jobs for students with financial need

Principal

The amount of money you borrowed

Interest

The cost for the use of borrowed money; calculated as a percentage

Loan Fees

Fee charged for each loan you receive

Student Loan Servicer

A Company that handles transactions for your federal student loan

Indirect Costs

Unbilled costs you'll have to pay for, such as books, equipment, transportation, etc.

Traditional Repayment Plan

Loan Payment Plan with: Lowest Interest Paid; Shortest Repayment Time

Direct Subsidized Loan

A federal student loan for which a borrower isn't generally responsible for paying the interest while in an in-school, grace, or deferment period

Graduated Repayment Plan

Loan Payment Plan with: Payments start lower and gradually increase

Delinquency

When you miss a loan payment

Income-Driven Repayment Plan (PAYE)

Loan Payment Plan with: Your payments are limited to a percentage of your discretionary income

Forbearance

Allows you to temporarily stop making your monthly student loan payments or temporarily make smaller payments; Interest is charged on all loan types during this time

Default

When you miss many federal loan payments for a total of at least 270 days

Wage Garnishment

Department of Education takes money directly from your paycheck to repay your federal student loans

Tax Refund/Federal Benefits Offsets

The Department of Education (ED) can work with the Internal Revenue Service (IRS) and state agencies to withhold your federal and/or state tax refunds to repay your defaulted federal student loans for as long as it takes to pay off your debt. It can also withhold other federal aid such as Social Security

Master Promissory Note (MPN)

A binding legal document that you must sign before you receive a federal student loan.

Deferment

A temporary postponement of payment on a loan during which interest generally does not accrue on Direct Subsidized Loans

PSLF

Public Service Loan Forgiveness

Lower and fixed interest rates (federal or private)

federal

Variable interest rates that exceed 18% (federal or private)

private

May require payments while still in school (federal or private)

private

Loan fees are lower (federal or private)

federal

Will not require payments in school (federal or private

federal

consolidation options, and options designed to assist borrowers struggling with payments, such as income-driven repayment plans (federal or private)

federal

Limited protections and repayment plans (federal or private)

private

No consolidation or loan forgiveness options (federal or private)

private

No credit check required (except for Direct PLUS Loans) (Federal Or Private)

Federal

Require an established financial or credit history that influences your loan costs, and may require a cosigner (Federal or Private)

private

No cosigner required in most cases (Federal or Private)

federal

Must have financial need (Subsidized or Unsubsidized)

subsidized

The government pays your interest while you are in college (Subsidized or Unsubsidized)

subsidized

Available regardless of financial need (Subsidized or unsubsidized)

unsubsidized

Interest is usually charged during all periods (Subsidized or Unsubsidized)

unsubsidized

The principal amount you take out to pay for school is different than the amount you will pay back because of the effect interest has on your balance. (true or false)

true

You should borrow only what you need.

true

The faster you pay off your debt, the less interest you pay overall.

true