Smart Money Certification Smc: College Smarts

This statement is false. Federal law does not prohibit lenders from reporting student loan defaults to the credit reporting agencies. In fact, student loan defaults can have a significant impact on an individual's credit score and credit history. Lenders have the right to report defaults to the credit reporting agencies, which can result in negative consequences for the borrower's creditworthiness.

Consolidating student loans involves combining multiple loans into one, typically with a new lender. When this consolidation occurs, the existing loans are paid off and a new loan is created. As a result, the grace period that may have been associated with the original loans is eliminated. This means that once the consolidation is complete, the borrower will no longer have the benefit of a grace period before they are required to start making payments on their consolidated loan. Therefore, the statement that consolidating student loans will eliminate any remaining grace period is true.

A mandatory forbearance refers to a situation where the lender is legally required to grant the forbearance. This means that the lender does not have the option to deny or refuse the forbearance request. Therefore, the statement "A mandatory forbearance means the lender must allow it" is true.

The statement is false because on an income-driven repayment plan, the amount paid every month is based on the borrower's income and family size. As these factors can change over time, the monthly payment amount can also change. Therefore, the amount paid every month on an income-driven repayment plan will not remain consistent over the life of the loan.

The statement is advising students to be cautious about late fees if they do not make timely payments after their student loan is transferred to a new loan servicer. This implies that there is a possibility of late fees being imposed by the new loan servicer if payments are not made on time. Therefore, the statement is true and students should be aware of this potential consequence.

Income-sensitive repayment plans are not only available to those with Parent PLUS loans. These plans are actually available for certain types of federal student loans, including Direct Subsidized Loans, Direct Unsubsidized Loans, and Federal Family Education Loans. These plans allow borrowers to adjust their monthly loan payments based on their income and family size. Therefore, the statement that income-sensitive repayment plans are only available to those with Parent PLUS loans is incorrect.

The Fair Credit Reporting Act does not allow debt collectors to discuss a borrower's student loan payment history and default status with an employer or family member. The Act prohibits the disclosure of this information to anyone other than the borrower, unless authorized by the borrower or required by law.

The statement suggests that although colleges are prohibited from using deceptive tactics to attract students or make false promises about job guarantees, some for-profit schools continue to engage in such practices. Therefore, the correct answer is True, indicating that the statement is accurate.

Attending a school without accreditation could make it difficult for a student to obtain federal financial aid because most financial aid programs require students to attend accredited institutions. It could also make it challenging for them to transfer credits to an accredited school since many accredited institutions do not accept credits from unaccredited schools. Additionally, not having accreditation could hinder a student's job prospects as many employers prefer to hire candidates with degrees from accredited institutions. Therefore, all of the above options are valid consequences of attending a school without accreditation.

Consolidating student loan debts can indeed erase benefits such as forgiveness, cancellation, or discharge of some of the debt. When borrowers consolidate their loans, they typically combine multiple loans into one new loan, which may result in the loss of certain benefits associated with the original loans. This is because the consolidation process often involves obtaining a new loan with different terms and conditions, potentially negating any previous benefits that were attached to the individual loans being consolidated. Therefore, it is true that consolidating student loan debts can eliminate certain benefits.

The statement is true because CLEP exams allow students to earn college credits by passing exams instead of taking courses, which can save them money on tuition. Tuition exchanges are agreements between colleges that allow students from one institution to attend another at a reduced cost. Professional judgment reviews involve financial aid officers reevaluating a student's financial need based on special circumstances, potentially resulting in more aid. Reciprocity programs allow students to pay in-state tuition rates at out-of-state colleges. All of these strategies can help students reduce their college costs.

Diploma mills refer to colleges or schools that engage in unethical practices such as offering credit for work experience without proper verification, charging a lump sum for a degree instead of a per-credit-hour fee, not requiring transcripts for admission, and withholding information about their faculty members. The correct answer is "All of the above" because all the mentioned characteristics are associated with diploma mills.

When individuals are struggling to repay their loans, the first point of contact should be the loan servicer. The loan servicer is responsible for managing the loan repayment process and can provide guidance and assistance to borrowers facing financial difficulties. They can offer options such as loan deferment, forbearance, or a revised repayment plan to help borrowers manage their loan obligations. Therefore, reaching out to the loan servicer is the most appropriate action to take in this situation.

Starting from May 2015, students are required to have an FSA ID, which consists of a username and password, in order to access their accounts on platforms like FAFSA or StudentLoans.gov. This measure was implemented to enhance security and protect students' personal information.

This statement is false because a credit score can be important to students while they are still in school. Building a good credit score early on can benefit students in the future when they need to apply for loans, credit cards, or even rent an apartment. It is important for students to establish responsible financial habits and understand the importance of maintaining a good credit score.

The given statement is false because STEM does not stand for Student Tuition Educational Mandates. STEM is actually an acronym that stands for Science, Technology, Engineering, and Mathematics, which are fields of study that are considered important in today's world.

All of the options listed, including reciprocity programs, qualifying for in-state tuition, CLEP exams, professional judgment review, and free tuition programs, are optional strategies that can help reduce the cost of college. These strategies can provide opportunities for students to save money by taking advantage of programs and resources available to them, such as reduced tuition rates, earning college credits through exams, or receiving financial aid through professional judgment reviews.

Consolidating student loans offers several benefits. Firstly, it provides a fixed interest rate, which means that the interest rate remains the same throughout the repayment period, providing stability and predictability. Secondly, it allows for lower monthly payments by extending the repayment term, making it more manageable for borrowers. Lastly, consolidating student loans combines multiple loans into one, simplifying the repayment process by requiring only one payment each month. Therefore, all the options listed (fixed interest rate, lower monthly payments, and one payment to make each month) are benefits of consolidating student loans.

Charging a large up-front fee to apply for college funding is likely a scam because legitimate organizations typically do not require such fees. Legitimate sources of college funding, such as scholarships, grants, and government programs, do not usually require applicants to pay a fee to apply. Therefore, it is important to be cautious and skeptical of any organization that asks for a large up-front fee for college funding applications.

Phony landlords deceive people by advertising fake rental properties near college campuses that they do not own. This is a common scam where individuals pretend to be landlords and try to trick students or tenants into paying rent or providing personal information for non-existent properties. It is important for renters to be cautious and verify the legitimacy of landlords and rental properties before making any payments or commitments.

The explanation for the given answer, False, is that the mean SAT or ACT score of a college can be an important criterion for students to consider when selecting a school. These standardized test scores can provide an indication of the academic standards and competitiveness of a college. However, it is not the only factor that should be considered, as there are other important aspects such as the college's curriculum, location, campus culture, extracurricular activities, and financial aid options that should also be taken into account.

Students should beware of all of the traps related to their student ID cards, including activation fees, usage fees, overdraft penalties, and interest charges. This means that students should be cautious about any additional charges or penalties that may be associated with their ID cards, as they may have to pay fees for activating the card, using it for certain services, facing penalties for overdrawing their accounts, or even paying interest charges on outstanding balances. It is important for students to carefully read the terms and conditions associated with their ID cards to avoid any unexpected costs or penalties.

The College Scorecard is a tool that provides information about specific schools, including their average cost, graduation rate, salary 10 years after graduation, and student loan debt. This allows students and their families to make informed decisions about which schools to attend based on factors such as affordability, job prospects, and potential debt burden. Therefore, the statement that the College Scorecard is used to identify these factors at specific schools is true.

Once a student loan has gone into default and is transferred to a debt collector, additional collection fees can be added to the debt. These fees can increase the total amount owed by as much as 40%. This means that if a student loan is not repaid and goes into default, the borrower may end up owing significantly more than the original loan amount due to these added fees. Therefore, the statement is true.

The statement is false because interest is not waived for those who let their student loans go into default due to an inability to find a job. In most cases, interest continues to accrue on student loans even if the borrower is unable to find employment. Defaulting on student loans can have serious consequences, including damage to credit scores and potential legal action from lenders. It is important for borrowers to explore options such as deferment or income-driven repayment plans if they are struggling to make payments.

A borrower cannot consolidate their own federal student loans with those of a spouse. Federal student loan consolidation only allows borrowers to consolidate their own federal student loans, not the loans of a spouse or any other individual. Consolidation combines multiple loans into one, simplifying the repayment process, but it is limited to an individual's own loans.

FAFSA stands for Free Application for Federal Student Aid. This acronym is used to refer to the application process through which students can apply for financial aid from the federal government to help cover the cost of their education. The FAFSA is an important step for students who are seeking financial assistance for college or university. By completing the FAFSA, students provide information about their financial situation, which is then used to determine their eligibility for various forms of federal aid, such as grants, loans, and work-study opportunities. Therefore, the statement "FAFSA stands for Free Application for Federal Student Aid" is true.

Borrowers typically need to meet certain qualifications and may also need a good credit score in order to consolidate their student loan debt. This means that not all borrowers will be eligible for loan consolidation, and having a good credit score can increase the likelihood of being approved for consolidation. Therefore, the statement "Typically, borrowers will need to qualify and may also need a good credit score to consolidate their student loan debt" is true.

If a student fails to make their student loan payments, anyone who co-signed on the loans can be held liable for the remaining debt. This means that if a student is unable to repay their student loans, the responsibility falls on the co-signer to make the payments. Co-signing a loan essentially means that the co-signer is equally responsible for the debt and can be pursued for repayment if the primary borrower defaults. Therefore, it is important for individuals to carefully consider the implications before agreeing to co-sign a loan.

Depending on the type of loan, it is possible for the government to pay the interest on student loans that are in deferment. This means that during the deferment period, the borrower does not have to make payments on the loan and the government covers the interest that accrues. However, it is important to note that this may not apply to all types of student loans, and eligibility for this benefit may vary.

Borrowers can identify their loan servicer by logging into the National Student Loan Data System (NSLDS) website using their FSA ID.

After July 1, 2013, the government will only subsidize the interest on student loans for first-time borrowers for a limited time. This means that the government will stop paying the interest on these loans after a certain period. Therefore, the statement "The clock is ticking for first-time borrowers after July 1, 2013, on how long the government will subsidize (pay interest on) their student loans" is true.

The explanation for the given correct answer is that on an income-driven repayment plan, the minimum monthly payment can be as low as $0. However, even though the payment is $0, it still counts towards the total number of monthly payments due until the remaining balance is forgiven. This means that even if the payment is not required, it is still considered as a payment towards the loan and counts towards the total number of payments required for forgiveness.

A school's cohort default rate refers to the percentage of students who have taken out federal student loans and then default on those loans within a certain timeframe. A high cohort default rate indicates that a significant number of students at that school are struggling to repay their loans. This can have a negative impact on the school's reputation and financial stability, which in turn can affect the quality of education and support services available to students. Additionally, potential employers may view graduates from schools with high default rates as less desirable candidates, potentially limiting job prospects for students.

The statement suggests that attending a big-name or well-known school is necessary for getting a good job in the current job market. However, this is not entirely true. While attending a prestigious school may provide certain advantages, such as networking opportunities, it is not the sole determining factor for obtaining a good job. Employers also consider factors such as skills, experience, and personal qualities. Therefore, it is false to claim that attending a well-known school is essential for securing a good job in today's competitive job market.

The government has the authority to withhold Social Security checks to repay federal student loans that are in default. This means that if someone has defaulted on their student loans, the government can legally garnish a portion of their Social Security benefits to recover the outstanding debt. This measure is taken to ensure that individuals fulfill their financial obligations and repay their student loans, even if it means using their Social Security income.

When selecting a degree program, it is essential to ask all of the above questions. Determining if a degree is necessary for the desired career field helps in making an informed decision. Considering the importance of GPA for a specific degree is crucial as it may affect future opportunities. Assessing the job prospects in the chosen field upon graduation helps in understanding the potential for employment. Additionally, evaluating if the job will pay enough to repay the debt incurred during education is important for financial planning. Therefore, all of these questions are essential to consider when selecting a degree program.

When comparing specific schools, it is important for students to consider the number of years it takes the average student to graduate, the percentage of students who actually graduate, the amount of debt incurred by the average student, and the default rate of former students. These criteria provide valuable information about the school's academic quality, student success rates, financial burden, and the ability of graduates to repay their loans. Considering all of these factors can help students make an informed decision about which college to choose.

Paying a scholarship search firm to identify the best scholarships may not necessarily be a good investment. There are numerous free resources available, such as online databases and college financial aid offices, that can help individuals find scholarships without the need for a paid service. Additionally, some scholarship search firms may not have access to all available scholarships, and their services may not guarantee success in obtaining scholarships. Therefore, it is not always necessary or advisable to pay for a scholarship search firm.

The explanation for the given correct answer is that the Department of Education has a 90/10 Rule, which means that a school must receive at least 10% of its revenue from non-federal sources. This rule is used to ensure that schools are not overly reliant on federal funding and have diverse sources of income. Therefore, when evaluating a school, it is important to consider whether it meets this rule as it indicates financial stability and independence.

IBR (Income-Based Repayment) and Pay As You Earn repayment plans for federal student loans indeed require a partial financial hardship to qualify. These repayment plans are designed to make loan repayment more manageable for borrowers who are experiencing financial difficulties. By considering the borrower's income and family size, these plans adjust the monthly loan payments accordingly. Therefore, if a borrower does not have a partial financial hardship, they may not be eligible for these repayment plans.

Defaulting on a student loan can have various negative consequences such as difficulty in opening a bank account, obtaining a new cell phone plan, or signing up for utilities. This is because defaulting on a loan reflects poorly on an individual's credit history, making them a higher risk for lenders and service providers. As a result, they may be denied access to these basic financial services and utilities.

Under an income-driven repayment plan, the student loan balance can be forgiven at the end. This is because income-driven repayment plans typically have a forgiveness provision after a certain number of years of making payments. The specific number of years can vary depending on the type of income-driven plan. However, it is important to note that forgiveness is not automatic and certain conditions need to be met, such as consistently making payments for the required number of years and meeting other eligibility criteria.

The statement is true because income-driven student loan payments are calculated based on the borrower's income. As the borrower's income increases, their monthly payments will also increase. However, the payments may be reduced if the borrower has a larger family size, as the calculation takes into account the individual's family size and adjusts the payment accordingly.

It is important for student loan borrowers to continually review possible new tricks used by some student loan servicers because these tricks can have a significant impact on their loan repayment process. By staying informed about the tactics employed by loan servicers, borrowers can protect themselves from potential scams or unfair practices and make informed decisions about their loans. This will help them manage their loans effectively and avoid any unnecessary financial burden.

A student loan may be discharged or canceled due to various reasons. If the school closes, the borrower may be eligible for loan discharge as they are unable to complete their education. If the borrower becomes totally and permanently disabled, they may also qualify for loan discharge. In the unfortunate event of the borrower's death, the loan may be discharged as well. Additionally, if the school issues a false certification of student eligibility, the borrower may be eligible for loan discharge. Therefore, all of the options listed in the answer are valid reasons for a student loan to be discharged.

False. Student loan debt collectors are required to provide documentation to verify the debt, regardless of its age. This is to ensure transparency and protect borrowers from fraudulent or incorrect claims.

A student loan rehabilitation can be used to bring student loan debt out of default status multiple times, not just once every five years. This allows students who have defaulted on their loans to rehabilitate their debt and regain eligibility for benefits such as deferment, forbearance, and loan forgiveness.

Private student loans are typically easier to discharge than federal student loans because they are not backed by the government. While federal student loans have more options for deferment, forbearance, and income-driven repayment plans, private student loans do not offer the same level of flexibility. In certain situations, such as bankruptcy, private student loans may be discharged entirely, while federal student loans are generally not dischargeable except in cases of extreme hardship. Therefore, it is true that it is sometimes easier to discharge private student loans than federal student loans.

If a college is not Title IV eligible, it means that it does not meet the requirements to participate in federal financial aid programs. This can make it easier for students to have their student loans discharged, either by communicating with the lender or through bankruptcy proceedings. Without Title IV eligibility, the college may not have met certain standards or may have engaged in fraudulent practices, making it more likely for the loans to be discharged. Therefore, the statement that it may be easier to have student loans discharged in this situation is true.