What Do You Know About Loan Repayment Module? Trivia Quiz
What Do You Know About Loan Repayment Module? There are different modules that are used for different loan takers, and they are determined by the level of creditworthiness that one has. Do you think you know how to choose the right loan repayment module? Take up this quiz and see what’s new for you to learn about the different modules.
Questions and Answers
- 1.
A student can change his/her repayment plan annually.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The Federal Family Education Loan Program (FFELP) allows the student to choose his/her repayment plan and to switch his/her plan annually if his/her financial needs change. Borrower can switch from one plan to another, s/her can do so once per year, so long as the maximum loan term for the new plan is longer than the amount of time the loans have already been in repayment. (In other words, if borrower is in year 26 of a 30-year extended repayment plan, s/he cannot switch to the income-based repayment plan and have the remaining balance written off.)Rate this question:
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- 2.
The following repayment plans can be granted and applied over the telephone with the servicer.
- A.
Graduated Repayment Plan
- B.
Extended Repayment Plan
- C.
Income-Based Repayment Plan
Correct Answer(s)
A. Graduated Repayment Plan
B. Extended Repayment PlanExplanation
Most servicers prefer the processing of Graduated and Extended Repayment Plans to be processed via phone to ensure the student is provided with projected monthly payment adjustments to complete total loan payoff.Rate this question:
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- 3.
The Standard Repayment Plan requires a $______ minimum monthly payment.
Correct Answer(s)
50
50.00
$50.00
fifty
fifty dollarsExplanation
Under the Standard Repayment Plan the student will pay a fixed monthly amount for a loan term of up to 10 years. Depending on the amount of the loan, the loan term may be shorter than 10 years. There is a $50 minimum monthly payment.Rate this question:
- 4.
The Extended Repayment Plan requires a minimum total of $__________ in federal student loans.
Correct Answer(s)
30000
30,000
30,000.00
30kExplanation
Under the Extended Repayment Plan, the student will pay a fixed annual or graduated repayment amount over a period not to exceed 25 years. As a FFELP borrower, the student must have more than $30,000 in outstanding FFEL Program loans.Rate this question:
- 5.
The government will pay any unpaid interest for the first three years on a subsidized federal student loan when the borrower has applied the following to his/her federal student loan:
- A.
Forbearance
- B.
Deferment [DUEM & DHAR]
- C.
Income-Based Repayment
Correct Answer(s)
B. Deferment [DUEM & DHAR]
C. Income-Based RepaymentExplanation
The Federal Government will pay any unpaid interest on subsidized loan during authorized deferment periods. If a student's monthly IBR payment amount does not cover the interest that accrues on his/her loans each month, the government will pay any unpaid accrued interest on the Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from the date the student began repaying his/her loans under IBR.Rate this question:
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- 6.
A student has to be a graduate student to qualify for the Graduated Repayment Plan.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
With this plan, the student's payments start out low and increase every two years. The length of the repayment period will be up to ten years. If the student expects his/her income to increase steadily over time, this plan may be right for him/her. The monthly payment will never be less than the amount of interest that accrues between payments. Although the monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment. There is no graduate status required for this repayment plan.Rate this question:
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- 7.
DERP stands for...
- A.
Deferment Economic Repayment Plan
- B.
Date Enter Repayment
- C.
Deferment Ends Repayment Plan Starts
Correct Answer
B. Date Enter RepaymentExplanation
Determine Date Entered Repayment DERP) = Separation date plus six months and one day The date of graduation, withdrawal, or less than half-time status will begin the student's grace plus one day will determine the student's DERP.Rate this question:
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- 8.
The Federal government pays unpaid interest on the subsidized loan during...
- A.
In-School
- B.
Grace Period
- C.
Deferment
Correct Answer(s)
A. In-School
B. Grace Period
C. DefermentExplanation
With Federal Subsidized Stafford Loan, the federal government pays the interest while the student in attending school and during grace and eligible deferment periods.Rate this question:
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- 9.
Joe Bob withdraws from school. He returns to school four months later. Joe Bob graduates. How many months of grace does Joe Bob have until he is required to begin repayment?
- A.
He begins repayment immediately
- B.
Two months
- C.
Six months
Correct Answer
C. Six monthsExplanation
Regardless of whether at student received subsidized or unsubsidized funds, the Stafford Loan has a six-month grace period. If the student allows his/her six-month grace period to elapse after leaving school, the Stafford Loan will not be eligible to receive a new grace period in the future. However, if the student interrupts his/her initial grace period by going back to school, enroll in enough units to maintain at least half-time status in a qualifying course of study and file the appropriate student deferment form, s/he will be allotted another six-month grace period.Rate this question:
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- 10.
If a student files joint taxes and is applying for the Income-Based Repayment Plan, s/he will need to provide the completed IBR Application and his/her taxes only.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
For married borrowers who file their taxes jointly, lenders will factor in the couple's total federal student loan debt, as well as their total income, to calculate payments. Originally, IBR did not recognize that joint income has to cover both spouses' federal loan payments, resulting in payment requirements up to twice what two equivalent single people would have to pay.Rate this question:
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- 11.
If a student is nearing the expiration of the IBR applied to his/her account and receives a letter from the servicer stating the IBR will expire in 45 days and a new plan is required, if the student doesn't respond to the letter which payment plan with the servicer apply to the account?
- A.
Standard Repayment Plan
- B.
Graduated Repayment Plan
- C.
Extended Repayment Plan
Correct Answer
A. Standard Repayment PlanExplanation
Current regulations require that when a student leaves IBR Program, s/her must go into a 10-year standard payment plan (or longer for a consolidated loan), minus the number of years s/her was in IBR. If a standard plan is not affordable, the student can switch to another plan, but can only return to IBR Program if s/her has a "partial financial hardship" and qualifies for the IBR Program.Rate this question:
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- 12.
A student in jail can apply for the Unemployment Deferment.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The following conditions must be met in order to qualify: 1. The student must be diligently seeking but unable to find full-time employment in any field or at any salary or responsibility level even if student is not eligible for unemployment benefits (or if eligibility expired). 2. A student must be registered with a private or public employment agency if there is one within 50 miles of his/her permanent or temporary address. School placement offices and “temporary agencies” do not qualify as public or private employment agencies. 3. If a student is requesting an extension of current unemployment deferment and is not providing documentation of eligibility for unemployment benefits, s/he must certify that s/he has made at least 6 diligent attempts to find employment on the most recent 6 months by checking the box in Section 2, Item B.Rate this question:
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- 13.
A student in jail can apply for the Income-Based Repayment Plan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The IBR Program is available to federal student loan borrowers in both the Direct and Guaranteed (or FFEL) loan programs, and covers most types of federal loans made to students, but not those made to parents (ParentPlus). To enter IBR, the student must have enough debt relative to his/her income to qualify for a reduced payment. That means it would take more than 15 percent of whatever s/her earn above 150% of the poverty level to pay off your loans on a standard 10-year payment plan. Because incarcerated students have no source of income and are not actively seeking full-time work, s/he is eligible for the IBR Program.Rate this question:
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- 14.
Direct Loans is the only servicer currently to process Loan Consolidations.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Until recently, a borrower could consolidate his or her loans under either the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP). However, recent legislation has amended the law that governs federal student loans. Specifically, the Health Care and Education Reconciliation Act of 2010 requires that no new loans may be made under the FFELP; any Stafford, PLUS, or Consolidation loan first disbursed on or after July 1, 2010, must be made under the FDLP. All Federal student loan consolidations have been appointed to be processed by Direct Loans.Rate this question:
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- 15.
Federal Student Loan Consolidation can take up to 120 days to process.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The process of federal student loan consolidation can take up to 120 days to process. When a borrower consolidates loans in the Direct Consolidation Loan Program, the U.S. Department of Education (Department) pays off the original Federal education loans and originates a new loan for the total amount of the loan(s) consolidated. Processing Steps: Application Review, Loan Verification, Repayment Processing, Loan Statement Sent to Borrowers, Payment to Loan Holders, Account Set-Up and Adding Loans to an Existing Direct Consolidation Loan.Rate this question:
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- 16.
Check the benefits of Income-Based Repayment Plan Program.
- A.
Student may qualify for a zero dollar payment
- B.
Renews all forbearance and deferment time
- C.
Student can apply for the IBR Program up to 25 years
Correct Answer(s)
A. Student may qualify for a zero dollar payment
C. Student can apply for the IBR Program up to 25 yearsExplanation
IBR Benefit #1 - Lower Monthly Payments The IBR program may substantially lower a graduate's monthly student loan payment. The calculation of the actual amount is based on a formula that considers the student's adjusted gross income level, the Federal poverty line, and the number of people the graduate financially supports. Payment can be as low as zero dollars. IBR Benefit #2 - Student Loan Forgiveness Under the Income-Based Repayment program, balances not paid off after either 10 or 25 years are forgiven by the Department of Education. While all borrowers can qualify for student loan forgiveness after 25 years, the 10-year forgiveness feature is reserved for those who have worked full-time in public service. IBR Benefit #3 - Student Loan Interest Subsidy If the newly calculated IBR payment doesn't cover the interest that is added to subsidized Stafford loan, the government will pay the difference for the first three years in the IBR program. After that, the unpaid interest is added to the loan balance.Rate this question:
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- 17.
A student can consolidate a minimum of one federal student loan.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Consolidation is similar to refinancing a loan. A borrower can consolidate all, just some, or even just one federal student loan.Rate this question:
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- 18.
The National Student Loan Database System (NSLDS) allows borrowers to view...
- A.
A summary of awareded Private and Federal Student Loans
- B.
A summary of awarded Federal Student Loans and Grants
- C.
A summary of outstanding balance of tutition owed directly to school
Correct Answer
B. A summary of awarded Federal Student Loans and GrantsExplanation
The National Student Loan Data System (NSLDS) is the U.S. Department of Education's (ED's) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.Rate this question:
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- 19.
Borrower will receive a penality fee when submitting a monthly payment earlier than scheduled or for an amount greater than owed.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
All Federal education loans allow prepayment without penalty. For loans that are not in default, any excess payment is applied first to interest and then to principal. However, if the additional payment is greater than one monthly installment, payment must include a note with the payment telling the processor whether prepayment is to be treated as a reduction in the principal. Otherwise, the government will treat it as though the borrower paid the next payment(s) early, and will delay the next payment due date as appropriate. (It is best to tell them to treat it as a reduction to the principal, since this will reduce the amount of interest borrower will pay over the lifetime of the loan.)Rate this question:
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- 20.
An Unsubsidized loan will accrue interest in the following stages...
- A.
From time loan is disbursbed to School
- B.
In school
- C.
During Grace
- D.
In Forbearance
- E.
In Deferment
- F.
During Repayment
Correct Answer(s)
A. From time loan is disbursbed to School
B. In school
C. During Grace
D. In Forbearance
E. In Deferment
F. During RepaymentExplanation
An Unsubsidized Stafford Loan is a federally guaranteed loan that is not based on financial need. Interest will accrue from the time the loan is disbursed to the school. The borrower does not have to make interest or principal payments until six months after graduation, or six months after you drop below a half time status.Rate this question:
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