Smart Money Certification Smc: College Smarts

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Alice Whinnery
A
Alice Whinnery
Community Contributor
Quizzes Created: 20 | Total Attempts: 1,999
| Attempts: 47 | Questions: 92
Please wait...
Question 1 / 92
0 %
0/100
Score 0/100
1. Federal law prohibits lenders from reporting student loan defaults to the credit reporting agencies.

Explanation

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.

Submit
Please wait...
About This Quiz
Smart Money Certification Smc: College Smarts - Quiz

Welcome to College Smarts, the final exam in LFE's Smart Money Certification!
As the cost of higher education continues to rise, it’s essential to learn how to reduce expenses and make smarter decisions in the selection process. It’s also crucial to identify — and avoid — the scams and pitfalls that... see morecost students and parents thousands every year.
Plus, over 43 million Americans are struggling to repay well over $1.2 trillion in student loan debt. One of the biggest problems is the excess of confusing information available to borrowers, but there are also costly traps to avoid when working with some loan servicers.
This exam is designed to pinpoint these and other problems students (and parents) of all ages are facing, and to help SMC candidates master the confusing and complex topics covered in our College Smarts section.
As outlined in each exam, read each question carefully; often a simple word can change the entire meaning of the question or answer. Be sure to use the information in the on-demand videos and the links in the SMC Resource Guide to help you answer many of these questions. Good luck!
see less

Personalize your quiz and earn a certificate with your name on it!
2. Consolidating student loans will eliminate any remaining grace period.

Explanation

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.

Submit
3. A mandatory forbearance means the lender must allow it.

Explanation

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.

Submit
4. The amount paid every month on an income-driven repayment plan will remain consistent over the life of the loan.

Explanation

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.

Submit
5. Students should beware of late fees if payments are not made in a timely manner after their student loan is sold to a new loan servicer.

Explanation

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.

Submit
6. Income-sensitive repayment plans are only available to those with Parent PLUS loans.

Explanation

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.

Submit
7. The Fair Credit Reporting Act allows debt collectors to discuss a borrower's student loan payment history and default status with an employer or family member.

Explanation

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.

Submit
8. Colleges are not allowed to use predatory schemes to attract students, or advertise inflated or phony job guarantees, yet some for-profit schools still use these techniques.

Explanation

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.

Submit
9. Attending a school without accreditation could make it difficult for a student to...

Explanation

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.

Submit
10. Consolidating student loan debts could erase benefits like forgiveness, cancellation, or discharge of some of the debt.

Explanation

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.

Submit
11. CLEP exams, tuition exchanges, professional judgment reviews, or reciprocity programs are all strategies students may be able to use to cut college costs.

Explanation

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.

Submit
12. The term diploma mills can refer to colleges or schools that...

Explanation

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.

Submit
13. Those who are struggling to repay their loans should first contact...

Explanation

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.

Submit
14. As of May 2015, students now need an FSA ID (a username and password) to log in to FAFSA or StudentLoans.gov.

Explanation

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.

Submit
15. A credit score isn't important to students while they are still in school.

Explanation

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.

Submit
16. STEM is an important acronym for every college student today because it stands for Student Tuition Educational Mandates.

Explanation

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.

Submit
17. Which of the following are optional strategies to reduce the cost of college?

Explanation

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.

Submit
18. Which of the following are benefits of consolidating student loans?

Explanation

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.

Submit
19. If an organization charges a large up-front fee to apply for college funding, it's probably a scam.

Explanation

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.

Submit
20. Phony landlords often place ads for bogus rental properties that are near college campuses, but that they don't actually own.

Explanation

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.

Submit
21. The mean SAT or ACT score of a college is not one of the key criteria students should use when selecting a school.

Explanation

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.

Submit
22. Students should beware of which of the following traps related to their student ID cards?

Explanation

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.

Submit
23. The College Scorecard is used to identify the average cost, graduation rate, salary 10 years after graduation, and student loan debt at specific schools.

Explanation

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.

Submit
24. Once a student loan has gone into default and been turned over to a debt collector, added collection fees can increase the debt owed by up to 40%.

Explanation

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.

Submit
25. Interest is waived for those who let their student loans go into default due to an inability to find a job.

Explanation

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.

Submit
26. A borrower can consolidate their own federal student loans with those of a spouse.

Explanation

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.

Submit
27. FAFSA stands for Free Application for Federal Student Aid.

Explanation

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.

Submit
28. Typically, borrowers will need to qualify — and may also need a good credit score — to consolidate their student loan debt.

Explanation

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.

Submit
29. 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.

Explanation

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.

Submit
30. Depending on the type of loan, the government may pay the interest on student loans in deferment.

Explanation

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.

Submit
31. Borrowers can identify their loan servicer by going to the National Student Loan Data System (NSLDS) Web site and logging in with their FSA ID.

Explanation

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

Submit
32. 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.

Explanation

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.

Submit
33. The minimum monthly payment on an income-driven repayment plan may be as low as $0, but it will still count toward the total number of monthly payments due until the remaining balance is forgiven.

Explanation

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.

Submit
34. A school's cohort default rate could affect a student's ability to graduate from that school, as well as their job prospects.

Explanation

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.

Submit
35. Attending a big-name or well-known school is essential for obtaining a good job in today's tight job market.

Explanation

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.

Submit
36. The government has the ability to garnish Social Security checks for federal student loans that are in default.

Explanation

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.

Submit
37. Which of these questions are essential to ask when selecting a degree program?

Explanation

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.

Submit
38. Which of the following are important college selection criteria for students to consider when comparing specific schools?

Explanation

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.

Submit
39. It's a good investment to pay a scholarship search firm to identify the best scholarships.

Explanation

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.

Submit
40. One of the key criteria used to evaluate the right school is whether it meets the Department of Education's 90/10 Rule.

Explanation

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.

Submit
41. IBR and Pay As You Earn repayment plans for federal student loans require a partial financial hardship to qualify.

Explanation

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.

Submit
42. Defaulting on a student loan can make it difficult to open a bank account, obtain a new cell phone plan, or sign up for utilities.

Explanation

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.

Submit
43. The student loan balance at the end of an income-driven repayment plan will be forgiven.

Explanation

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.

Submit
44. Monthly payments on an income-driven student loan will go up as the borrower's income rises, but may be reduced due to the individual's family size.

Explanation

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.

Submit
45. It's a good idea for student loan borrowers to continually review possible new tricks used by some student loan servicers.

Explanation

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.

Submit
46. A student loan may be discharged or canceled due to...

Explanation

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.

Submit
47. Student loan debt collectors are not required to provide documentation to verify the debt if it is less than five years old.

Explanation

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.

Submit
48. A student loan rehabilitation can only be used to bring student loan debt out of default status once every five years.

Explanation

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.

Submit
49. It is sometimes easier to discharge private student loans than federal student loans.

Explanation

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.

Submit
50. If the college you attend was not Title IV eligible, it may be easier to have the student loans discharged by communicating with the lender or through bankruptcy proceedings.

Explanation

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.

Submit
51. To make the most of the investment in college, which of the following questions should be a high priority?

Explanation

The question asks about prioritizing the most important factor for making the most of the investment in college. Option C asks about the school's debt level, which is crucial as it indicates the financial stability and potential risks associated with the institution. Option E asks about the ROI (Return on Investment) of the school, which is also significant as it helps determine the value and potential benefits of the education provided. Therefore, prioritizing these factors (C and E) would be essential for maximizing the investment in college.

Submit
52. Retirees can have their student loans forgiven if they wait until age 66 to begin collecting Social Security.

Explanation

The statement is false because waiting until age 66 to begin collecting Social Security does not automatically result in student loan forgiveness for retirees. Student loan forgiveness programs typically have specific eligibility criteria and requirements that must be met in order for loans to be forgiven. Age alone is not a determining factor for loan forgiveness.

Submit
53. If an attorney can show undue hardship using the Brunner Test, you may be able to eliminate some or all of your student loan debt through bankruptcy.

Explanation

The Brunner Test is a legal standard used by courts to determine whether a debtor can discharge their student loan debt through bankruptcy. If an attorney can successfully demonstrate that the debtor meets the requirements of the Brunner Test, which include showing that they have made a good faith effort to repay the loans, that they are unable to maintain a minimal standard of living due to the loan payments, and that their financial situation is unlikely to change in the future, then it is possible to eliminate some or all of the student loan debt through bankruptcy. Therefore, the statement is true.

Submit
54. Which of the following are possible drawbacks of a borrower consolidating a variety of student loans?

Explanation

Consolidating a variety of student loans can have several drawbacks. Firstly, the borrower may lose the ability to defer payments during periods of financial hardship. Secondly, debt forgiveness programs may no longer be available for some of the loans. Thirdly, it may be harder to discharge specific loans in bankruptcy. Lastly, there is a possibility of paying more interest over the life of the loan. Therefore, all of the above options are possible drawbacks of a borrower consolidating student loans.

Submit
55. Many states and schools have early deadlines (before filing your tax return) for applying for student aid.

Explanation

Many states and schools have early deadlines for applying for student aid, which means that students need to submit their applications before filing their tax returns. This is because financial aid applications often require information from tax returns, such as income and tax information. By having early deadlines, states and schools can ensure that students have enough time to complete their applications and receive their financial aid in a timely manner. Therefore, the statement that many states and schools have early deadlines for applying for student aid is true.

Submit
56. A student loan forbearance allows borrowers who are struggling to repay their loans — generally due to financial hardship or illness — to reduce or even stop making their payments for up to 12 months.

Explanation

A student loan forbearance is a program that provides temporary relief to borrowers who are facing difficulties in repaying their loans. This relief is typically offered to individuals who are experiencing financial hardship or illness. During the forbearance period, borrowers have the option to reduce or completely stop making their loan payments for a duration of up to 12 months. Therefore, the statement "True" accurately reflects the concept of a student loan forbearance.

Submit
57. Defaulting on a student loan could play a part in determining where you'll be able to live, work, and possibly even who you marry in the future.

Explanation

Defaulting on a student loan can have serious consequences that can impact various aspects of one's life. When a person defaults on a student loan, it can negatively affect their credit score, making it difficult to secure loans or mortgages in the future. This can limit their options for housing and potentially restrict their ability to live in certain areas. Additionally, employers may conduct credit checks as part of the hiring process, and a poor credit history due to defaulting on a loan could hinder job prospects. Lastly, defaulting on a loan can also impact personal relationships, as it can affect one's financial stability and ability to contribute to shared expenses, potentially influencing decisions regarding marriage.

Submit
58. The statute of limitations to collect private student loans is 10 years.

Explanation

The explanation for the correct answer is that the statute of limitations to collect private student loans varies depending on the state and the terms of the loan agreement. In some states, the statute of limitations may be longer or shorter than 10 years. Therefore, it is not universally true that the statute of limitations to collect private student loans is 10 years.

Submit
59. CNNMoney's Cost of College Estimator provides the estimated net costs after subtracting grants and scholarships at specific colleges, including tuition, fees, and room and board.

Explanation

The given statement is true. CNNMoney's Cost of College Estimator calculates the estimated net costs of specific colleges by subtracting grants and scholarships from the total expenses, including tuition, fees, and room and board. This tool helps students and families get an idea of the actual costs they might have to bear after taking into account any financial aid they may receive.

Submit
60. A felony due to identity theft by a criminal — but listed under an innocent student's stolen Social Security number — could prevent the student from qualifying for financial aid or from being accepted to schools at which they've applied.

Explanation

Identity theft can have serious consequences for innocent victims, such as in this case where a criminal commits a felony using an innocent student's stolen Social Security number. This can lead to negative outcomes for the student, including being denied financial aid and being rejected from schools they have applied to. Therefore, it is true that a felony due to identity theft can prevent the student from qualifying for financial aid or being accepted to schools.

Submit
61. Which of these career fields may qualify for partial student loan forgiveness?

Explanation

The correct answer is "All of the above." All of the mentioned career fields may qualify for partial student loan forgiveness. Physicians or nurses working with the National Health Service Corps, military personnel, lawyers practicing in public service or non-profit fields, teachers, and volunteers with the Peace Corps are all eligible for partial student loan forgiveness programs.

Submit
62. Student loan debt has grown by more than 50% over the past decade.

Explanation

The given statement is true because it states that student loan debt has increased by over 50% in the last ten years. This indicates that the amount of money students owe for their education has significantly grown during this time period.

Submit
63. A borrower who has let their student loans go into default will not have access to the new income-based repayment options.

Explanation

When a borrower defaults on their student loans, it means they have failed to make payments for an extended period of time. In such cases, the borrower may not have access to the new income-based repayment options. These options are typically available to borrowers who are in good standing with their loans and demonstrate a financial need. Defaulting on student loans can have serious consequences, including the loss of certain repayment options. Therefore, the statement is true.

Submit
64. Debt collectors are allowed to use which of the following tactics when trying to collect on student loans that are in default?

Explanation

The correct answer is "None of the above" because debt collectors are not allowed to use any of the mentioned tactics when trying to collect on student loans that are in default. They cannot threaten legal action that they cannot or do not intend to take, falsely claim that student loans cannot be relieved in bankruptcy, seek payments after the statute of limitations has passed, falsely represent themselves as an attorney or government agency member, or claim that the borrower has committed a crime and may be arrested.

Submit
65. Which of the following are reputable places to begin the process of identifying possible scholarships or financial assistance?

Explanation

Fastweb.com, AFCEA.org, and SallieMae.com are reputable places to begin the process of identifying possible scholarships or financial assistance. These websites provide reliable information and resources for students to search and apply for scholarships and financial aid. FDIC.gov and CFPB.gov are not relevant to scholarships or financial assistance, so they are not reputable places for this purpose. Therefore, the correct answer is A, C, and D.

Submit
66. Borrowers who can't afford to make their federal student loan payments should...

Explanation

Borrowers who can't afford to make their federal student loan payments should avoid letting them go into default and apply for an IBR (Income-Based Repayment) plan. Defaulting on student loans can have severe consequences, such as damage to credit scores and wage garnishment. By avoiding default and applying for an IBR plan, borrowers can potentially lower their monthly payments based on their income and family size, making it more manageable for them to repay their loans. Asking parents for help or going into hiding or ignoring the payments are not recommended solutions.

Submit
67. There are scholarships for many types of students, including which of the following?

Explanation

The correct answer is "All of the above." This means that there are scholarships available for war veterans, STEM majors, twins attending specific schools, tall people, and golf caddies. This implies that students belonging to any of these categories can apply for scholarships and potentially receive financial assistance for their education.

Submit
68. Which of these strategies should students consider to make themselves more marketable after graduation?

Explanation

Students should consider all of the strategies mentioned to make themselves more marketable after graduation. By identifying job opportunities for their degree program before registering and throughout their college career, they can tailor their education and experiences to meet the demands of the job market. Additionally, considering a minor in a specialty that would make their degree more appealing to an employer can give them a competitive edge. Working in a mentoring or internship program in their chosen field allows students to gain practical experience and build professional networks. Finally, being careful about what they post on social media sites is important as potential employers often check social media profiles when making hiring decisions.

Submit
69. The government will pay the interest on student loans during the time they are in forbearance.

Explanation

The government does not pay the interest on student loans during the time they are in forbearance. When a loan is in forbearance, the borrower is responsible for paying the interest that accrues on the loan. This means that interest continues to accumulate on the loan balance, and the borrower will have to pay that interest once the forbearance period ends.

Submit
70. New federal guidelines require all remaining balances on student loan debt to be forgiven 20 years after the student leaves school.

Explanation

The given statement is false. The explanation is that the statement incorrectly states that new federal guidelines require all remaining balances on student loan debt to be forgiven 20 years after the student leaves school. In reality, there are various repayment plans and forgiveness options available for student loans, but there is no blanket requirement for forgiveness after 20 years. The forgiveness options depend on factors such as the type of loan, repayment plan, and the borrower's eligibility.

Submit
71. Some student loan servicers automatically place a loan in good standing into default if a co-signer files bankruptcy.

Explanation

If a co-signer files for bankruptcy, some student loan servicers automatically consider the loan to be in default. This means that the borrower is no longer able to make payments on the loan and it can have serious consequences for their credit score and financial future.

Submit
72. Which of the following are disadvantages of the standard repayment plan (for borrowers with federal student loans)?

Explanation

The standard repayment plan for borrowers with federal student loans has several disadvantages. Firstly, payments will be higher compared to the Income-Based Repayment (IBR) plan. Secondly, payments are not based on income, which means they do not take into account the borrower's ability to pay. Additionally, choosing the standard repayment plan means paying more interest over the life of the loan. Lastly, if the borrower loses their job, the payments will still remain the same, putting them at a financial disadvantage. Therefore, the correct answer is A, B, and D.

Submit
73. Student loan borrowers who want to qualify for the income-contingent repayment plans must earn less than $25,000 to be eligible for this type of loan.

Explanation

The statement is false because it states that student loan borrowers must earn less than $25,000 to be eligible for income-contingent repayment plans. In reality, the income requirements for income-contingent repayment plans vary and are not solely based on earning less than $25,000.

Submit
74. New federal guidelines require private student loan lenders to offer the same repayment plans and terms available for federal loans.

Explanation

The given statement is false. The new federal guidelines do not require private student loan lenders to offer the same repayment plans and terms as federal loans. Private student loan lenders have their own set of repayment plans and terms that may differ from those offered by federal loans. These guidelines only apply to federal loans and do not regulate private student loans. Therefore, the statement is incorrect.

Submit
75. The Web site PaybackTime.com is a site that helps students determine how much they can earn in their chosen field, including majors that will "pay them back."

Explanation

The given statement is "The Web site PaybackTime.com is a site that helps students determine how much they can earn in their chosen field, including majors that will 'pay them back.'" The correct answer is False because the statement is not true. The website PaybackTime.com does not help students determine how much they can earn in their chosen field or provide information about majors that will "pay them back."

Submit
76. Which student loan repayment plan is based on your family size and income?

Explanation

The student loan repayment plans that are based on your family size and income are IBR (Income-Based Repayment), Income-contingent, and Pay As You Earn. These plans take into consideration your financial situation, including your family size and income, to determine the amount you are required to pay towards your student loans. Graduated and Extended repayment plans do not take family size and income into account when calculating the repayment amount. Therefore, the correct answer is A, C, and E.

Submit
77. If a student's parents make too much money, the student won't qualify for financial aid.

Explanation

The statement suggests that if a student's parents make too much money, the student won't qualify for financial aid. However, this statement is false. Financial aid eligibility is not solely based on the income of the student's parents. Other factors such as the cost of attendance, the number of dependents in the household, and the student's own financial situation are also taken into consideration. Therefore, it is possible for a student whose parents make a high income to still qualify for financial aid.

Submit
78. A lender must provide a forbearance on a student loan if the borrower qualifies for a partial repayment of their loans under the DOD Student Loan Repayment Program.

Explanation

The explanation for the given correct answer is that according to the statement, a lender is required to provide a forbearance on a student loan if the borrower qualifies for a partial repayment of their loans under the DOD Student Loan Repayment Program. This means that if a borrower meets the criteria for partial repayment under this program, the lender must temporarily suspend or reduce the borrower's loan payments. Therefore, the statement is true.

Submit
79. The government will subsidize (pay the interest on) student loans when the borrower is approved for a forbearance.

Explanation

The statement is false because the government does not subsidize or pay the interest on student loans when the borrower is approved for a forbearance. A forbearance is a temporary pause or reduction in loan payments granted by the lender, but the borrower is still responsible for paying the interest that accrues during this period. The government may provide other forms of assistance or relief for student loans, but it does not specifically subsidize loans during forbearance.

Submit
80. The amount remaining after making on-time payments for 10 years in an income-driven repayment plan will be forgiven.

Explanation

The statement is false because in an income-driven repayment plan, the remaining balance after making on-time payments for 20 to 25 years (depending on the specific plan) will be forgiven, not after 10 years.

Submit
81. Student loan debt could possibly qualify for forgiveness if the student was unable to graduate or did not have adequate skills to find a good job.

Explanation

The statement suggests that student loan debt could qualify for forgiveness if the student was unable to graduate or did not have adequate skills to find a good job. However, this statement is false. Student loan forgiveness programs typically have specific criteria, such as working in certain professions or for specific employers, making consistent payments for a certain period, or meeting income requirements. Graduation or job skills are not typically factors for loan forgiveness.

Submit
82. A student loan deferment helps borrowers who are struggling to repay their loans put a hold on their payments for up to 12 months due to a job loss or other hardship.

Explanation

A student loan deferment does not necessarily help borrowers who are struggling to repay their loans due to a job loss or other hardship. While a deferment may be an option for some borrowers facing financial difficulties, it is not automatically granted in such situations. The eligibility for a deferment depends on various factors, including the type of loan and the borrower's specific circumstances. Therefore, it is not accurate to say that a deferment helps all borrowers who are struggling to repay their loans.

Submit
83. Lenders have the right to garnish Social Security checks for private student loans that are in default.

Explanation

Lenders do not have the right to garnish Social Security checks for private student loans that are in default. Social Security benefits are protected from garnishment by federal law, except in cases of unpaid federal taxes, federal student loans, child support, or alimony. Private student loans are not included in the exceptions, so lenders cannot garnish Social Security checks for defaulting on private student loans.

Submit
84. A student loan deferment is available for all student loan borrowers who are struggling to make their payments.

Explanation

False. A student loan deferment is not available for all student loan borrowers who are struggling to make their payments. While deferment options may be available for some borrowers, eligibility criteria and specific circumstances vary depending on the type of loan and the lender. It is important for borrowers to contact their loan servicer or lender to discuss their options and determine if they qualify for deferment or other payment assistance programs.

Submit
85. Once a student loan debt has been rehabilitated, the borrower...

Explanation

Once a student loan debt has been rehabilitated, the borrower has access to income-based repayment options, is able to borrow more money to complete his/her education, may be eligible for loan forgiveness programs, and has improved credit since the "default" status on the loan is removed.

Submit
86. Which of the following might be an unanticipated college expense for students?

Explanation

An unanticipated college expense for students could be any of the options listed. College collectibles, graduation fees, pledging a sorority or fraternity, student ID cards, and parking fees are all potential expenses that students may not have initially considered when budgeting for college. These expenses can add up and contribute to the overall cost of attending college.

Submit
87. Borrowers of private student loans can have their tax refunds seized by lenders to repay the debt.

Explanation

Private student loan lenders do not have the authority to seize borrowers' tax refunds to repay the debt. Unlike federal student loans, private student loans do not have the same collection powers. Private lenders may take legal action to recover the debt, but they cannot directly seize tax refunds. Therefore, the correct answer is false.

Submit
88. The best place to begin the process of applying for private student loans is StudentLoans.gov.

Explanation

The statement is false because StudentLoans.gov is a website that provides information about federal student loans, not private student loans. Private student loans are typically obtained through banks, credit unions, or other private lenders. Therefore, the best place to begin the process of applying for private student loans would be through the websites or offices of these private lenders.

Submit
89. The Net Price Calculator is used to determine the total student loan debt students will have upon graduation.

Explanation

The Net Price Calculator is not used to determine the total student loan debt students will have upon graduation. Instead, it is used to estimate the net price of attending a particular college or university, which includes tuition, fees, and other expenses minus any grants or scholarships. The calculator helps students and their families get an idea of how much they will need to pay out of pocket or borrow in loans to cover the cost of attendance.

Submit
90. Private and federal student loans are considered to be in default when a borrower misses 270 days of payments.

Explanation

Private and federal student loans are not considered to be in default after a borrower misses 270 days of payments. The correct answer is False. The timeframe for default on student loans can vary depending on the type of loan and the terms agreed upon, but generally, federal student loans go into default after 270 days of missed payments, while private student loans may have different default timelines.

Submit
91. Student loan servicers are not allowed to automatically place a loan in good standing into default if a co-signer passes away.

Explanation

Student loan servicers are allowed to automatically place a loan in good standing into default if a co-signer passes away. This is because the co-signer is responsible for the loan and their death can have an impact on the borrower's ability to repay the loan.

Submit
92. The grace period for a Direct Unsubsidized Loan is the first six months after you graduate or leave school.

Explanation

The grace period for a Direct Unsubsidized Loan is not the first six months after you graduate or leave school. In fact, there is no grace period for a Direct Unsubsidized Loan. This means that as soon as you graduate or leave school, you will be required to start making payments on your loan.

Submit
View My Results

Quiz Review Timeline (Updated): Mar 14, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 14, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 10, 2015
    Quiz Created by
    Alice Whinnery
Cancel
  • All
    All (92)
  • Unanswered
    Unanswered ()
  • Answered
    Answered ()
Federal law prohibits lenders from reporting student loan defaults to...
Consolidating student loans will eliminate any remaining grace period.
A mandatory forbearance means the lender must allow it.
The amount paid every month on an income-driven repayment plan will...
Students should beware of late fees if payments are not made in a...
Income-sensitive repayment plans are only available to those with...
The Fair Credit Reporting Act allows debt collectors to discuss a...
Colleges are not allowed to use predatory schemes to attract students,...
Attending a school without accreditation could make it difficult for a...
Consolidating student loan debts could erase benefits like...
CLEP exams, tuition exchanges, professional judgment reviews, or...
The term diploma mills can refer to colleges or schools that...
Those who are struggling to repay their loans should first contact...
As of May 2015, students now need an FSA ID (a username and password)...
A credit score isn't important to students while they are still in...
STEM is an important acronym for every college student today because...
Which of the following are optional strategies to reduce the cost of...
Which of the following are benefits of consolidating student loans?
If an organization charges a large up-front fee to apply for college...
Phony landlords often place ads for bogus rental properties that are...
The mean SAT or ACT score of a college is not one of the key criteria...
Students should beware of which of the following traps related to...
The College Scorecard is used to identify the average cost, graduation...
Once a student loan has gone into default and been turned over to a...
Interest is waived for those who let their student loans go into...
A borrower can consolidate their own federal student loans with those...
FAFSA stands for Free Application for Federal Student Aid.
Typically, borrowers will need to qualify — and may also need a...
If a student fails to make their student loan payments, anyone who...
Depending on the type of loan, the government may pay the interest on...
Borrowers can identify their loan servicer by going to the National...
The clock is ticking for first-time borrowers after July 1, 2013, on...
The minimum monthly payment on an income-driven repayment plan may be...
A school's cohort default rate could affect a student's...
Attending a big-name or well-known school is essential for obtaining a...
The government has the ability to garnish Social Security checks for...
Which of these questions are essential to ask when selecting a degree...
Which of the following are important college selection criteria for...
It's a good investment to pay a scholarship search firm to...
One of the key criteria used to evaluate the right school is whether...
IBR and Pay As You Earn repayment plans for federal student loans...
Defaulting on a student loan can make it difficult to open a bank...
The student loan balance at the end of an income-driven repayment plan...
Monthly payments on an income-driven student loan will go up as the...
It's a good idea for student loan borrowers to continually review...
A student loan may be discharged or canceled due to...
Student loan debt collectors are not required to provide documentation...
A student loan rehabilitation can only be used to bring student loan...
It is sometimes easier to discharge private student loans than federal...
If the college you attend was not Title IV eligible, it may be easier...
To make the most of the investment in college, which of the following...
Retirees can have their student loans forgiven if they wait until age...
If an attorney can show undue hardship using the Brunner Test, you may...
Which of the following are possible drawbacks of a borrower...
Many states and schools have early deadlines (before filing your tax...
A student loan forbearance allows borrowers who are struggling to...
Defaulting on a student loan could play a part in determining where...
The statute of limitations to collect private student loans is 10...
CNNMoney's Cost of College Estimator provides the estimated net...
A felony due to identity theft by a criminal — but listed under...
Which of these career fields may qualify for partial student loan...
Student loan debt has grown by more than 50% over the past decade.
A borrower who has let their student loans go into default will not...
Debt collectors are allowed to use which of the following tactics when...
Which of the following are reputable places to begin the process of...
Borrowers who can't afford to make their federal student loan...
There are scholarships for many types of students, including which of...
Which of these strategies should students consider to make themselves...
The government will pay the interest on student loans during the time...
New federal guidelines require all remaining balances on student loan...
Some student loan servicers automatically place a loan in good...
Which of the following are disadvantages of the standard repayment...
Student loan borrowers who want to qualify for the income-contingent...
New federal guidelines require private student loan lenders to offer...
The Web site PaybackTime.com is a site that helps students determine...
Which student loan repayment plan is based on your family size and...
If a student's parents make too much money, the student won't...
A lender must provide a forbearance on a student loan if the borrower...
The government will subsidize (pay the interest on) student loans when...
The amount remaining after making on-time payments for 10 years in an...
Student loan debt could possibly qualify for forgiveness if the...
A student loan deferment helps borrowers who are struggling to repay...
Lenders have the right to garnish Social Security checks for private...
A student loan deferment is available for all student loan borrowers...
Once a student loan debt has been rehabilitated, the borrower...
Which of the following might be an unanticipated college expense for...
Borrowers of private student loans can have their tax refunds seized...
The best place to begin the process of applying for private student...
The Net Price Calculator is used to determine the total student loan...
Private and federal student loans are considered to be in default when...
Student loan servicers are not allowed to automatically place a loan...
The grace period for a Direct Unsubsidized Loan is the first six...
Alert!

Advertisement