Personal Finance - 1st Semester Final Exam

Front

What is interest in the context of student loans?

Back

Interest is the cost of borrowing money, expressed as a percentage of the loan amount, which increases the total amount to be repaid over time.

Front

What is net income?

Back

Net income is the amount of money you take home after all deductions, including taxes, have been subtracted from your gross income.

Front

What are the three main sources of funding for education?

Back

Grants, scholarships, and work.

Front

How long does it typically take to pay off student loan debt?

Back

On average, it takes about 20 years to pay off student loan debt.

Front

Does dropping out of college eliminate the obligation to pay student loans?

Back

No, dropping out of college does not relieve you of the responsibility to repay student loans.

Front

What is a student loan?

Back

A student loan is a type of loan specifically designed to help students pay for their education, which must be repaid with interest.

Front

What is the difference between a grant and a scholarship?

Back

A grant is typically need-based financial aid that does not need to be repaid, while a scholarship is usually merit-based and also does not need to be repaid.

Front

What is the debt snowball method?

Back

The debt snowball method is a debt reduction strategy where you pay off your smallest debts first to build momentum and motivation.

Front

What is the importance of budgeting in personal finance?

Back

Budgeting helps individuals track their income and expenses, ensuring they live within their means and save for future goals.

Front

What are the consequences of defaulting on a student loan?

Back

Defaulting on a student loan can lead to damaged credit, wage garnishment, and loss of eligibility for future financial aid.