Student Loan Debt Relief Quiz
What is the standard repayment period for federal student loans?
A) 10 years
B) 15 years
C) 20 years
D) 25 years
Answer: A) 10 years
Which of the following programs offers loan forgiveness after 10 years of qualifying payments while working in public service?
A) Teacher Loan Forgiveness
B) Public Service Loan Forgiveness (PSLF)
C) Income-Driven Repayment Forgiveness
D) Perkins Loan Cancellation
Answer: B) Public Service Loan Forgiveness (PSLF)
What is the purpose of an income-driven repayment plan?
A) To lower monthly payments based on income and family size
B) To reduce interest rates on loans
C) To provide immediate loan forgiveness
D) To consolidate loans
Answer: A) To lower monthly payments based on income and family size
Which type of student loan is eligible for forgiveness under the PSLF program?
A) Private loans
B) Federal Direct Loans
C) Perkins Loans
D) Parent PLUS Loans
Answer: B) Federal Direct Loans
What happens to federal student loans if the borrower becomes permanently disabled?
A) They must continue payments
B) Loans are forgiven
C) Loans are deferred
D) Interest is paused
Answer: B) Loans are forgiven
What is a grace period in the context of student loans?
A) A time when payments are not required after graduation
B) A period when interest rates are reduced
C) A temporary pause in repayment during financial hardship
D) A penalty-free extension on a payment
Answer: A) A time when payments are not required after graduation
Which agency manages federal student loans?
A) Internal Revenue Service (IRS)
B) Department of Education
C) Federal Reserve
D) Social Security Administration
Answer: B) Department of Education
How many qualifying payments must be made under PSLF to achieve forgiveness?
A) 60 payments
B) 120 payments
C) 240 payments
D) 300 payments
Answer: B) 120 payments
Which of the following is NOT an income-driven repayment plan?
A) Income-Based Repayment (IBR)
B) Income-Contingent Repayment (ICR)
C) Standard Repayment Plan
D) Pay As You Earn (PAYE)
Answer: C) Standard Repayment Plan
What happens to student loan debt when a borrower declares bankruptcy?
A) All loans are discharged
B) Federal loans are forgiven
C) Loans are rarely discharged
D) Repayment terms are automatically adjusted
Answer: C) Loans are rarely discharged
What is the maximum forgiveness amount under the Teacher Loan Forgiveness program?
A) $5,000
B) $10,000
C) $17,500
D) $25,000
Answer: C) $17,500
Which repayment plan allows loan forgiveness after 20 or 25 years of payments?
A) Graduated Repayment Plan
B) Extended Repayment Plan
C) Income-Driven Repayment Plans
D) PSLF
Answer: C) Income-Driven Repayment Plans
Who qualifies for the PSLF waiver announced in 2021?
A) Only new borrowers
B) Borrowers who consolidate loans into Direct Loans
C) Borrowers who made any payments on non-qualifying plans
D) Borrowers with private loans
Answer: C) Borrowers who made any payments on non-qualifying plans
Which type of loan is generally ineligible for forgiveness programs?
A) Perkins Loans
B) Parent PLUS Loans
C) Private student loans
D) Federal Direct Loans
Answer: C) Private student loans
What is loan consolidation?
A) Combining multiple loans into a single loan with one monthly payment
B) Forgiving all outstanding loan balances
C) Reducing the principal amount of loans
D) Delaying payments
Answer: A) Combining multiple loans into a single loan with one monthly payment
How is eligibility for income-driven repayment plans determined?
A) Credit score
B) Marital status
C) Income and family size
D) Graduation date
Answer: C) Income and family size
Which legislation temporarily paused student loan payments during the COVID-19 pandemic?
A) CARES Act
B) Higher Education Relief Act
C) Student Loan Forgiveness Act
D) Economic Stabilization Act
Answer: A) CARES Act
What is the interest rate on federal student loans during a deferment period?
A) 0%
B) Reduced to half the original rate
C) Continues to accrue at the standard rate
D) Interest does not accrue for subsidized loans
Answer: D) Interest does not accrue for subsidized loans
Which loan forgiveness program specifically targets healthcare professionals?
A) PSLF
B) Nurse Corps Loan Repayment Program
C) Teacher Loan Forgiveness
D) Perkins Loan Cancellation
Answer: B) Nurse Corps Loan Repayment Program
What is the purpose of student loan refinancing?
A) To qualify for forgiveness programs
B) To lower interest rates and combine private and federal loans
C) To delay repayment indefinitely
D) To reduce the total loan amount
Answer: B) To lower interest rates and combine private and federal loans
Can Parent PLUS loans qualify for income-driven repayment?
A) No
B) Yes, through consolidation into a Direct Consolidation Loan
C) Only for borrowers earning less than $50,000
D) Yes, without restrictions
Answer: B) Yes, through consolidation into a Direct Consolidation Loan
What is the main drawback of refinancing federal student loans with a private lender?
A) Higher interest rates
B) Loss of federal protections and forgiveness options
C) Inability to consolidate loans
D) Increased monthly payments
Answer: B) Loss of federal protections and forgiveness options
How often must borrowers recertify income for income-driven repayment plans?
A) Every 6 months
B) Annually
C) Every 2 years
D) Monthly
Answer: B) Annually
What happens if you miss a student loan payment?
A) Loan is forgiven
B) Loan goes into default immediately
C) Late fees may apply, and credit is impacted
D) Interest rate increases
Answer: C) Late fees may apply, and credit is impacted
What is the main benefit of deferment over forbearance?
A) Lower monthly payments
B) Subsidized loans do not accrue interest during deferment
C) Longer duration of relief
D) No documentation required
Answer: B) Subsidized loans do not accrue interest during deferment
What is the eligibility criterion for Perkins Loan Cancellation?
A) Income level
B) Specific jobs in public service or teaching
C) Repayment plan choice
D) Graduation date
Answer: B) Specific jobs in public service or teaching
What is the most common reason for PSLF application denials?
A) High income
B) Missing paperwork or ineligible payments
C) Consolidated private loans
D) Non-degree educational loans
Answer: B) Missing paperwork or ineligible payments
What is a major advantage of graduated repayment plans?
A) Payments increase over time as income grows
B) Immediate forgiveness of loans
C) Lower interest rates
D) Extended repayment terms
Answer: A) Payments increase over time as income grows
Which of the following qualifies as public service employment for PSLF?
A) Non-profit organizations under 501(c)(3)
B) Privately-owned companies
C) Freelance workers
D) Sole proprietorships
Answer: A) Non-profit organizations under 501(c)(3)
What is the primary benefit of student loan forbearance?
A) Loan forgiveness
B) Temporary pause or reduction of payments during hardship
C) Lower interest rates
D) Permanent repayment adjustments
Answer: B) Temporary pause or reduction of payments during hardship
What is the primary eligibility requirement for Teacher Loan Forgiveness?
A) Working in a private school
B) Teaching for 5 consecutive years in a low-income school or educational service agency
C) Having loans older than 10 years
D) Being employed part-time
Answer: B) Teaching for 5 consecutive years in a low-income school or educational service agency
What is the maximum percentage of a borrower’s discretionary income used to calculate payments in PAYE (Pay As You Earn) plans?
A) 5%
B) 10%
C) 15%
D) 20%
Answer: B) 10%
What type of loans are eligible for consolidation into a Direct Consolidation Loan?
A) Only private loans
B) Only federal loans
C) Both federal and private loans
D) Only Parent PLUS loans
Answer: B) Only federal loans
Which type of repayment plan starts with low payments that increase every two years?
A) Standard Repayment Plan
B) Graduated Repayment Plan
C) Income-Based Repayment Plan
D) Extended Repayment Plan
Answer: B) Graduated Repayment Plan
Which student loan relief option is most likely to benefit individuals experiencing temporary financial hardship?
A) Loan forgiveness
B) Forbearance
C) Refinancing
D) Income-driven repayment
Answer: B) Forbearance
What is the main factor that determines monthly payments in an income-driven repayment plan?
A) Loan balance
B) Borrower’s credit score
C) Borrower’s income and family size
D) Interest rate
Answer: C) Borrower’s income and family size
Which program offers partial forgiveness for healthcare professionals working in underserved areas?
A) Public Service Loan Forgiveness
B) Perkins Loan Cancellation
C) National Health Service Corps Loan Repayment Program
D) Teacher Loan Forgiveness
Answer: C) National Health Service Corps Loan Repayment Program
How long can a borrower defer student loan payments while enrolled in graduate school?
A) 6 months
B) Until graduation
C) As long as they are enrolled at least half-time
D) 12 months
Answer: C) As long as they are enrolled at least half-time
What happens to unpaid federal student loans after 20–25 years under an income-driven repayment plan?
A) Loans are discharged, but the borrower may owe taxes on the forgiven amount
B) Loans are forgiven without tax consequences
C) Loans are refinanced at a lower rate
D) Borrowers are required to pay the remaining balance in full
Answer: A) Loans are discharged, but the borrower may owe taxes on the forgiven amount
What distinguishes deferment from forbearance?
A) Forbearance pauses interest, but deferment does not
B) Deferment is only available for subsidized loans
C) Interest generally does not accrue during deferment for subsidized loans
D) Forbearance extends the repayment term
Answer: C) Interest generally does not accrue during deferment for subsidized loans
What is the main drawback of extending your repayment term to 25 years?
A) Higher monthly payments
B) Longer time to qualify for forgiveness programs
C) More interest paid over the life of the loan
D) Loss of federal loan benefits
Answer: C) More interest paid over the life of the loan
Which of the following actions can lead to losing eligibility for PSLF?
A) Switching jobs to a private sector employer
B) Refinancing federal loans into private loans
C) Missing required annual certification
D) All of the above
Answer: D) All of the above
How are interest rates on federal student loans determined?
A) By the borrower’s credit score
B) Based on the year the loan is disbursed and federal legislation
C) By the Department of Education on a case-by-case basis
D) Fixed by private lenders
Answer: B) Based on the year the loan is disbursed and federal legislation
What is the main feature of Revised Pay As You Earn (REPAYE) compared to PAYE?
A) Payments are capped at 15% of discretionary income
B) REPAYE includes married borrowers’ spouse’s income in calculations
C) REPAYE has a lower income eligibility requirement
D) REPAYE is only available for graduate loans
Answer: B) REPAYE includes married borrowers’ spouse’s income in calculations
What is one benefit of automatic federal student loan payment plans?
A) Lower interest rates
B) Automatic qualification for loan forgiveness
C) A 0.25% interest rate reduction for auto-debit payments
D) Immediate forgiveness of accrued interest
Answer: C) A 0.25% interest rate reduction for auto-debit payments
What is the primary goal of student loan refinancing?
A) Extending the repayment term
B) Reducing the monthly payment
C) Obtaining a lower interest rate
D) Qualifying for loan forgiveness
Answer: C) Obtaining a lower interest rate
Which federal program is specifically designed to help military service members with student loans?
A) Servicemembers Civil Relief Act (SCRA)
B) Public Service Loan Forgiveness (PSLF)
C) Teacher Loan Forgiveness
D) Perkins Loan Cancellation
Answer: A) Servicemembers Civil Relief Act (SCRA)
What happens to a borrower’s federal student loans if they declare bankruptcy?
A) The loans are automatically discharged
B) The borrower must prove undue hardship for discharge
C) The loans are placed in forbearance indefinitely
D) The borrower’s loans are converted to private loans
Answer: B) The borrower must prove undue hardship for discharge
Which of the following repayment plans is NOT income-driven?
A) Income-Based Repayment (IBR)
B) Pay As You Earn (PAYE)
C) Standard Repayment Plan
D) Revised Pay As You Earn (REPAYE)
Answer: C) Standard Repayment Plan
What is a key difference between subsidized and unsubsidized federal loans?
A) Only unsubsidized loans accrue interest while in school
B) Subsidized loans have no borrowing limit
C) Unsubsidized loans require a credit check
D) Subsidized loans can only be used for graduate programs
Answer: A) Only unsubsidized loans accrue interest while in school
Which of these scenarios would typically disqualify a borrower from federal loan forgiveness?
A) Missing payments on a standard repayment plan
B) Consolidating federal loans
C) Refinancing federal loans into private loans
D) Enrolling in an income-driven repayment plan
Answer: C) Refinancing federal loans into private loans
What does the term “capitalized interest” mean in the context of student loans?
A) The interest rate increases over time
B) Interest is added to the loan principal, increasing the total debt
C) Interest is temporarily paused during deferment
D) Interest is forgiven if payments are made on time
Answer: B) Interest is added to the loan principal, increasing the total debt
What is one advantage of income-driven repayment plans for borrowers with low income?
A) Loan payments can be reduced to $0 in some cases
B) The repayment term is shorter than 10 years
C) Interest rates are fixed at 2%
D) Private loans can also be included
Answer: A) Loan payments can be reduced to $0 in some cases
Which loans are NOT eligible for Public Service Loan Forgiveness (PSLF)?
A) Direct Loans
B) Federal Family Education Loans (FFEL)
C) Direct Consolidation Loans
D) Parent PLUS Loans under certain conditions
Answer: B) Federal Family Education Loans (FFEL)
How many qualifying payments must be made under PSLF before loans can be forgiven?
A) 60
B) 120
C) 240
D) 300
Answer: B) 120
What is a major risk of refinancing federal student loans with a private lender?
A) Higher monthly payments
B) Loss of federal benefits and protections
C) Fixed interest rates become variable
D) Increased loan principal
Answer: B) Loss of federal benefits and protections
What is the maximum forgiveness amount under Teacher Loan Forgiveness for qualifying individuals?
A) $5,000
B) $10,000
C) $17,500
D) $25,000
Answer: C) $17,500
Which of the following conditions might qualify a borrower for Total and Permanent Disability (TPD) Discharge?
A) Chronic illness
B) Documented inability to work due to disability
C) Graduation with honors
D) High debt-to-income ratio
Answer: B) Documented inability to work due to disability
Which federal law established the Income-Contingent Repayment (ICR) plan?
A) Higher Education Act
B) College Cost Reduction and Access Act
C) Health Care and Education Reconciliation Act
D) Budget Control Act
Answer: A) Higher Education Act
What is the interest rate reduction offered to borrowers who use autopay for federal student loans?
A) 0.10%
B) 0.15%
C) 0.25%
D) 0.50%
Answer: C) 0.25%
Which of the following is NOT a requirement for qualifying for Public Service Loan Forgiveness (PSLF)?
A) Working full-time for a qualifying employer
B) Making 120 qualifying monthly payments
C) Having only private student loans
D) Being on a qualifying repayment plan
Answer: C) Having only private student loans
What is the maximum time a borrower can defer federal student loans for economic hardship?
A) 6 months
B) 12 months
C) 24 months
D) 36 months
Answer: D) 36 months
Which repayment plan is specifically designed for borrowers with high debt-to-income ratios?
A) Standard Repayment Plan
B) Extended Repayment Plan
C) Income-Based Repayment (IBR)
D) Graduated Repayment Plan
Answer: C) Income-Based Repayment (IBR)
What is the purpose of loan rehabilitation for defaulted federal student loans?
A) To extend the repayment term
B) To qualify the borrower for forgiveness programs
C) To remove the default status from the borrower’s credit report
D) To consolidate loans
Answer: C) To remove the default status from the borrower’s credit report
What is one key benefit of consolidating federal student loans?
A) Lowering the interest rate
B) Combining multiple loans into a single payment
C) Qualifying for private loan forgiveness programs
D) Automatically reducing the loan balance
Answer: B) Combining multiple loans into a single payment
What happens to federal student loans if the borrower dies?
A) They are transferred to the borrower’s estate
B) They are discharged and do not need to be repaid
C) They are refinanced to a lower rate
D) The co-signer becomes responsible for repayment
Answer: B) They are discharged and do not need to be repaid
What is the main difference between deferment and forbearance?
A) Forbearance is only available for private loans
B) Interest may not accrue during deferment for subsidized loans
C) Deferment allows for longer pauses in payment
D) Forbearance reduces monthly payments to zero permanently
Answer: B) Interest may not accrue during deferment for subsidized loans
Which program provides forgiveness for Perkins Loans for teachers in shortage areas?
A) Teacher Loan Forgiveness
B) Public Service Loan Forgiveness
C) Perkins Loan Cancellation
D) Income-Based Repayment Forgiveness
Answer: C) Perkins Loan Cancellation
What is the primary benefit of enrolling in an income-contingent repayment (ICR) plan?
A) Fixed monthly payments
B) Payments based on income and family size
C) A lower interest rate
D) Eligibility for private loan consolidation
Answer: B) Payments based on income and family size
Which of the following is NOT a benefit of federal student loans compared to private loans?
A) Flexible repayment options
B) Fixed interest rates
C) Eligibility for forgiveness programs
D) No credit check for all types of loans
Answer: D) No credit check for all types of loans
What is a key feature of Parent PLUS Loans?
A) They are only available to graduate students
B) They allow parents to borrow on behalf of their child
C) They have variable interest rates
D) They are automatically forgiven after 10 years
Answer: B) They allow parents to borrow on behalf of their child
What is one consequence of defaulting on federal student loans?
A) Automatic forgiveness of the loan
B) Loss of eligibility for federal aid programs
C) Interest rates are reduced to zero
D) Loan balance is reduced by 50%
Answer: B) Loss of eligibility for federal aid programs
Which repayment plan offers forgiveness after 25 years of payments?
A) Standard Repayment Plan
B) Income-Contingent Repayment (ICR)
C) Extended Repayment Plan
D) Graduated Repayment Plan
Answer: B) Income-Contingent Repayment (ICR)
How can borrowers reduce the amount of interest they pay over the life of their student loan?
A) Extend the repayment term
B) Make extra payments toward the principal
C) Switch to a graduated repayment plan
D) Delay payments through deferment
Answer: B) Make extra payments toward the principal
What is the main goal of the Fresh Start Initiative for defaulted student loans?
A) Lower the interest rate for defaulted loans
B) Allow borrowers to rehabilitate loans without penalties
C) Automatically forgive defaulted loans
D) Convert federal loans to private loans
Answer: B) Allow borrowers to rehabilitate loans without penalties
Which of the following is a requirement to qualify for loan discharge due to school closure?
A) The borrower must have been enrolled when the school closed
B) The borrower must have completed 50% of the program
C) The borrower must transfer credits to another institution
D) The borrower must apply within 10 years of the closure
Answer: A) The borrower must have been enrolled when the school closed
What is the main advantage of the Revised Pay As You Earn (REPAYE) plan compared to other income-driven repayment plans?
A) All borrowers qualify regardless of income
B) Interest not covered by payments is partially subsidized
C) REPAYE offers the lowest interest rates
D) REPAYE is only available for graduate loans
Answer: B) Interest not covered by payments is partially subsidized
What is the grace period for federal Direct Loans after graduation?
A) 3 months
B) 6 months
C) 9 months
D) 12 months
Answer: B) 6 months
Which of the following can result in a borrower losing eligibility for income-driven repayment plans?
A) Switching to private loans
B) Consolidating federal loans
C) Missing one payment
D) Graduating with high debt
Answer: A) Switching to private loans
What does the term “interest capitalization” mean in the context of student loans?
A) Reducing interest rates during repayment
B) Adding unpaid interest to the principal balance
C) Forgiving a portion of the loan interest
D) Changing interest rates from fixed to variable
Answer: B) Adding unpaid interest to the principal balance
How does loan consolidation affect the interest rate of federal loans?
A) It combines the weighted average of the existing loans’ rates
B) It lowers the interest rate by 1%
C) It increases the rate to a fixed 10%
D) It resets the interest rate to zero
Answer: A) It combines the weighted average of the existing loans’ rates
Which organization manages federal student loan forgiveness programs?
A) U.S. Department of Education
B) Internal Revenue Service (IRS)
C) Federal Trade Commission (FTC)
D) Consumer Financial Protection Bureau (CFPB)
Answer: A) U.S. Department of Education
Which type of loan is eligible for Public Service Loan Forgiveness (PSLF)?
A) Private student loans
B) Perkins Loans without consolidation
C) Direct Loans
D) Home equity loans used for education
Answer: C) Direct Loans
What is a common drawback of the Graduated Repayment Plan?
A) Payments increase over time
B) Payments are fixed at a high rate
C) It is only available for private loans
D) It does not qualify for forgiveness programs
Answer: A) Payments increase over time
What is one condition for receiving Teacher Loan Forgiveness?
A) Teaching full-time in a low-income school for five consecutive years
B) Earning a master’s degree in education
C) Volunteering in after-school programs
D) Teaching part-time for 10 years
Answer: A) Teaching full-time in a low-income school for five consecutive years
Which repayment plan is ideal for borrowers expecting their income to increase significantly over time?
A) Standard Repayment Plan
B) Graduated Repayment Plan
C) Income-Based Repayment (IBR)
D) Extended Repayment Plan
Answer: B) Graduated Repayment Plan
What is the minimum loan balance required to qualify for the Extended Repayment Plan?
A) $10,000
B) $20,000
C) $30,000
D) $40,000
Answer: C) $30,000
What is the primary purpose of the Perkins Loan Cancellation program?
A) To offer a fixed interest rate for low-income borrowers
B) To forgive loans for public service professionals
C) To extend repayment terms for federal loans
D) To reduce interest for private loans
Answer: B) To forgive loans for public service professionals
What happens to a borrower’s federal loans if they fail to recertify income under an income-driven repayment plan?
A) The loans are automatically forgiven
B) Payments revert to the standard repayment amount
C) Interest rates are reduced
D) Loans enter deferment
Answer: B) Payments revert to the standard repayment amount
What is the main benefit of using autopay for federal student loan payments?
A) Payments are delayed by up to 30 days
B) Borrowers receive a 0.25% interest rate reduction
C) Loans are automatically forgiven after 5 years
D) Payments can be skipped without penalties
Answer: B) Borrowers receive a 0.25% interest rate reduction
What is the main goal of the Borrower Defense to Repayment program?
A) To refinance private student loans
B) To discharge federal loans if a school misled students
C) To reduce interest rates on federal loans
D) To extend repayment terms to 40 years
Answer: B) To discharge federal loans if a school misled students
Which income-driven repayment plan offers forgiveness after 20 years for undergraduate loans?
A) Pay As You Earn (PAYE)
B) Income-Contingent Repayment (ICR)
C) Standard Repayment Plan
D) Extended Repayment Plan
Answer: A) Pay As You Earn (PAYE)
What is one disadvantage of loan consolidation?
A) Loss of forgiveness eligibility
B) Loss of interest subsidies on subsidized loans
C) Increased monthly payments
D) Reduced total repayment period
Answer: B) Loss of interest subsidies on subsidized loans
How many qualifying payments are required for Public Service Loan Forgiveness (PSLF)?
A) 60
B) 120
C) 240
D) 300
Answer: B) 120
Which of the following statements about student loan forbearance is TRUE?
A) Interest does not accrue during forbearance for unsubsidized loans
B) Forbearance can last indefinitely
C) Forbearance allows borrowers to temporarily pause payments
D) Forbearance reduces the total loan balance
Answer: C) Forbearance allows borrowers to temporarily pause payments
What is the primary benefit of refinancing student loans with a private lender?
A) Access to federal loan forgiveness programs
B) Lower monthly payments based on income
C) Potentially lower interest rates
D) Automatic discharge in cases of disability
Answer: C) Potentially lower interest rates
What does the term “subsidized” mean in federal student loans?
A) The borrower is responsible for interest while in school
B) Interest is paid by the government while the borrower is in school
C) The loan is forgiven after 10 years
D) The loan has a variable interest rate
Answer: B) Interest is paid by the government while the borrower is in school
Which of the following is a requirement for Perkins Loan Cancellation?
A) Working in a qualifying public service role
B) Enrolling in an income-driven repayment plan
C) Consolidating loans into a Direct Consolidation Loan
D) Earning less than a specific income threshold
Answer: A) Working in a qualifying public service role
What happens if a borrower makes extra payments toward their student loan?
A) It increases the interest rate
B) It shortens the repayment term
C) It increases the total loan balance
D) It changes the repayment plan
Answer: B) It shortens the repayment term
Which organization manages the National Student Loan Data System (NSLDS)?
A) Internal Revenue Service (IRS)
B) U.S. Department of Education
C) Federal Reserve
D) Consumer Financial Protection Bureau (CFPB)
Answer: B) U.S. Department of Education
What is a key feature of the Pay As You Earn (PAYE) repayment plan?
A) Fixed monthly payments over 10 years
B) Payments capped at 10% of discretionary income
C) Forgiveness after 30 years of payments
D) Available only for private loans
Answer: B) Payments capped at 10% of discretionary income
Which student loan type is eligible for interest subsidies during deferment?
A) Unsubsidized loans
B) Subsidized loans
C) PLUS loans
D) Private loans
Answer: B) Subsidized loans
What is the primary benefit of enrolling in the Extended Repayment Plan?
A) Lower monthly payments over a longer term
B) Eligibility for PSLF
C) Fixed monthly payments with forgiveness after 10 years
D) Interest rate reduction
Answer: A) Lower monthly payments over a longer term
What is one way to prevent student loans from going into default?
A) Switching to a private loan
B) Requesting deferment or forbearance
C) Ignoring payment notices
D) Consolidating with high-interest private loans
Answer: B) Requesting deferment or forbearance
What is a key disadvantage of defaulting on federal student loans?
A) Loss of access to federal repayment options
B) Immediate forgiveness of loan balance
C) No impact on credit score
D) Waiver of interest accumulation
Answer: A) Loss of access to federal repayment options
What is one way borrowers can avoid accruing additional interest on unsubsidized loans during deferment?
A) Consolidating the loan
B) Making interest-only payments
C) Switching to an income-driven repayment plan
D) Applying for loan cancellation
Answer: B) Making interest-only payments
Which federal repayment plan is designed specifically for parent PLUS loans?
A) Income-Based Repayment (IBR)
B) Income-Contingent Repayment (ICR)
C) Pay As You Earn (PAYE)
D) Revised Pay As You Earn (REPAYE)
Answer: B) Income-Contingent Repayment (ICR)
What does “capitalized interest” result in for a borrower?
A) Lower overall interest costs
B) Interest added to the principal balance
C) Fixed monthly payments
D) Forgiveness of a portion of the loan
Answer: B) Interest added to the principal balance
What is a common requirement for federal student loan forgiveness programs?
A) Full repayment of private loans first
B) Enrollment in an income-driven repayment plan
C) Earning a graduate degree
D) Completing 10 years of part-time work
Answer: B) Enrollment in an income-driven repayment plan
Which of the following is an example of a qualifying employer for PSLF?
A) A for-profit company
B) A government agency
C) A private school without non-profit status
D) A retail corporation
Answer: B) A government agency
What is the repayment term for most federal loans under the Standard Repayment Plan?
A) 5 years
B) 10 years
C) 15 years
D) 20 years
Answer: B) 10 years
What is the key difference between deferment and forbearance for federal loans?
A) Deferment always pauses interest accrual, while forbearance does not
B) Forbearance is only available to graduate students
C) Deferment lasts longer than forbearance
D) Forbearance leads to loan forgiveness
Answer: A) Deferment always pauses interest accrual, while forbearance does not
Which repayment plan extends payments up to 25 years based on loan balance?
A) Graduated Repayment Plan
B) Standard Repayment Plan
C) Extended Repayment Plan
D) Revised Pay As You Earn (REPAYE)
Answer: C) Extended Repayment Plan
What is one key benefit of income-driven repayment (IDR) plans?
A) Fixed monthly payments regardless of income
B) Loan forgiveness after a set number of years
C) Reduced interest rates
D) Eligibility for private loan refinancing
Answer: B) Loan forgiveness after a set number of years
What type of student loan debt can be included in a bankruptcy discharge under rare circumstances?
A) Federal Direct Loans
B) Private loans
C) Both federal and private loans
D) Only Perkins Loans
Answer: C) Both federal and private loans
How often must borrowers recertify their income for income-driven repayment plans?
A) Monthly
B) Quarterly
C) Annually
D) Every two years
Answer: C) Annually
What is the minimum qualifying service period for Perkins Loan Cancellation for teachers?
A) 1 year
B) 3 years
C) 5 years
D) 7 years
Answer: A) 1 year
What happens to student loans after a borrower dies?
A) They are transferred to family members
B) They are forgiven for federal loans
C) Interest continues to accrue until paid
D) Private loans are automatically forgiven
Answer: B) They are forgiven for federal loans
What is a major disadvantage of refinancing federal loans with a private lender?
A) Loss of access to federal repayment benefits
B) Higher fixed interest rates
C) Loss of eligibility for private scholarships
D) Increased monthly payments
Answer: A) Loss of access to federal repayment benefits
What is the benefit of the Fresh Start program introduced for defaulted loans?
A) Automatic loan forgiveness after one payment
B) Restores eligibility for federal aid
C) Reduces the interest rate to zero
D) Extends repayment terms to 40 years
Answer: B) Restores eligibility for federal aid
Which of the following is NOT eligible for Public Service Loan Forgiveness (PSLF)?
A) Full-time government employee
B) Full-time non-profit employee
C) Part-time volunteer work with a nonprofit
D) Full-time teacher at a public school
Answer: C) Part-time volunteer work with a nonprofit
Which of the following repayment plans calculates monthly payments based on income and family size?
A) Income-Based Repayment (IBR)
B) Standard Repayment Plan
C) Income-Contingent Repayment (ICR)
D) Graduated Repayment Plan
Answer: A) Income-Based Repayment (IBR)
How many years of qualifying employment are required for PSLF?
A) 5 years
B) 10 years
C) 15 years
D) 20 years
Answer: B) 10 years
What type of loan can be forgiven under the Teacher Loan Forgiveness Program?
A) Parent PLUS Loans
B) Federal Direct Loans
C) Private loans
D) Perkins Loans only
Answer: B) Federal Direct Loans
Which of the following is an eligible federal student loan for consolidation into a Direct Consolidation Loan?
A) Private loans
B) Parent PLUS Loans
C) Only subsidized loans
D) Only undergraduate loans
Answer: B) Parent PLUS Loans
Which of the following is NOT a benefit of enrolling in an income-driven repayment (IDR) plan?
A) Reduced monthly payments based on income
B) Loan forgiveness after a specific period
C) Lower interest rates
D) Eligibility for PSLF
Answer: C) Lower interest rates
What is the consequence of failing to make student loan payments for a prolonged period?
A) Immediate loan forgiveness
B) Loan default
C) Reduced monthly payments
D) Transfer of loan to another lender
Answer: B) Loan default
Which program provides relief for borrowers who were misled by their school?
A) Teacher Loan Forgiveness
B) Borrower Defense to Repayment
C) Public Service Loan Forgiveness
D) Income-Contingent Repayment
Answer: B) Borrower Defense to Repayment
What is the benefit of enrolling in the Revised Pay As You Earn (REPAYE) plan?
A) Payments are based on income and family size
B) Payments are fixed for the loan term
C) Loan forgiveness after 10 years
D) Payments are capped at 10% of discretionary income
Answer: A) Payments are based on income and family size
Which of the following is true about federal student loan interest rates?
A) Interest rates are fixed for all loans
B) Interest rates for federal loans are adjusted annually
C) Interest rates are the same for all borrowers
D) Federal student loan interest rates are the lowest available
Answer: B) Interest rates for federal loans are adjusted annually
What is the maximum loan forgiveness under the Teacher Loan Forgiveness Program?
A) $2,500
B) $5,000
C) $10,000
D) $17,500
Answer: D) $17,500
What is the repayment term for a Direct Consolidation Loan?
A) 5-10 years
B) 10-30 years
C) 15-20 years
D) 30-40 years
Answer: B) 10-30 years
Which of the following can help borrowers avoid default on their federal loans?
A) Changing repayment plans
B) Ignoring the loan servicer
C) Refinancing private loans
D) Refusing to pay off loans
Answer: A) Changing repayment plans
Which repayment plan is designed for borrowers whose income may be too low to qualify for other IDR plans?
A) Income-Based Repayment (IBR)
B) Income-Contingent Repayment (ICR)
C) Pay As You Earn (PAYE)
D) Standard Repayment Plan
Answer: B) Income-Contingent Repayment (ICR)
Which type of student loan is eligible for income-driven repayment plans?
A) Only Direct Loans
B) Only subsidized loans
C) Only federal loans
D) Private loans
Answer: C) Only federal loans
What is a major drawback of refinancing federal student loans with a private lender?
A) Loss of access to income-driven repayment options
B) Lower interest rates for the borrower
C) Extension of loan term
D) Automatic loan forgiveness
Answer: A) Loss of access to income-driven repayment options
Under the Income-Based Repayment (IBR) plan, what is the maximum percentage of a borrower’s discretionary income that can be required for monthly payments?
A) 5%
B) 10%
C) 15%
D) 20%
Answer: B) 10%
Which federal loan program offers loan cancellation after 25 years of qualifying payments under an income-driven repayment plan?
A) Public Service Loan Forgiveness
B) Teacher Loan Forgiveness
C) Income-Driven Repayment Plan
D) Income-Contingent Repayment Plan
Answer: C) Income-Driven Repayment Plan
What is the purpose of a federal loan servicer?
A) To provide financial aid for college tuition
B) To handle all aspects of loan repayment and billing
C) To collect student loans on behalf of private lenders
D) To advise students on loan forgiveness programs
Answer: B) To handle all aspects of loan repayment and billing
Which of the following does NOT qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program?
A) Working for a non-profit hospital
B) Working for a state government
C) Working for a for-profit employer
D) Teaching at a public school
Answer: C) Working for a for-profit employer
Which of the following loan types is eligible for the Income-Driven Repayment plans?
A) Direct Subsidized Loans
B) Federal Perkins Loans
C) Private Loans
D) Parent PLUS Loans
Answer: A) Direct Subsidized Loans
What is the benefit of enrolling in a Graduated Repayment Plan?
A) Payments start lower and increase every two years
B) Fixed monthly payments for the entire loan term
C) Lower overall interest paid
D) Eligibility for loan forgiveness after 10 years
Answer: A) Payments start lower and increase every two years
What action can borrowers take to prevent loan default if they are struggling to make payments?
A) Stop paying and wait for the loan to be forgiven
B) Contact the loan servicer to discuss repayment options
C) Apply for private refinancing
D) Transfer the loan to a friend or family member
Answer: B) Contact the loan servicer to discuss repayment options
Which of the following programs is specifically designed for teachers working in low-income schools?
A) Public Service Loan Forgiveness (PSLF)
B) Teacher Loan Forgiveness Program
C) Income-Contingent Repayment Plan
D) Federal Family Education Loan (FFEL)
Answer: B) Teacher Loan Forgiveness Program
What is the maximum amount of loan forgiveness available under the Teacher Loan Forgiveness Program for highly qualified teachers in low-income schools?
A) $5,000
B) $7,500
C) $10,000
D) $17,500
Answer: D) $17,500
Which of the following is required to qualify for Public Service Loan Forgiveness (PSLF)?
A) Work in any government or nonprofit job for 5 years
B) Make 120 qualifying payments under a qualifying repayment plan
C) Complete a master’s degree while working for a non-profit
D) Have private loans converted to federal loans
Answer: B) Make 120 qualifying payments under a qualifying repayment plan
How long does a borrower have to be in an income-driven repayment plan to qualify for loan forgiveness?
A) 5 years
B) 10 years
C) 20 years
D) 25 years
Answer: D) 25 years
Which federal loan repayment plan adjusts monthly payments based on changes in income and family size?
A) Income-Based Repayment (IBR)
B) Graduated Repayment Plan
C) Income-Contingent Repayment (ICR)
D) Standard Repayment Plan
Answer: C) Income-Contingent Repayment (ICR)
Which of the following is true about student loan forgiveness for borrowers with disabilities?
A) All federal student loans are automatically forgiven after 5 years of disability
B) Borrowers must apply and submit medical documentation to be eligible
C) Forgiveness is available for both federal and private loans
D) Only private loans qualify for disability forgiveness
Answer: B) Borrowers must apply and submit medical documentation to be eligible
What happens if a borrower consolidates their loans but does not qualify for PSLF after 10 years of qualifying payments?
A) The borrower is automatically refunded
B) Loan forgiveness is still granted after consolidation
C) The borrower must reapply for forgiveness under a different plan
D) Consolidation voids all prior PSLF progress
Answer: C) The borrower must reapply for forgiveness under a different plan