Paying For College

Fill in the blank: ________ Interest is unpaid interest added to the principal balance of a loan.

• Capitalized

• Simple

• Compound

• Accrued

Answer explanation

Capitalized interest refers to unpaid interest that is added to the principal balance of a loan, increasing the total amount owed. This distinguishes it from simple and compound interest, which are calculated differently.

Fill in the blank: A ________ is someone who agrees to take responsibility for a person's debt if they cannot repay it.

• cosigner

• underwriter

• broker

• debtor

Answer explanation

A cosigner is a person who agrees to take on the responsibility of repaying a debt if the primary borrower defaults. This makes 'cosigner' the correct choice, as the other options do not fit this definition.

Fill in the blank: The ________ of Attendance includes all expenses of going to college.

• Cost

• Price

• Expense

• Fee

Answer explanation

The correct choice is 'Cost' because it encompasses all expenses associated with attending college, including tuition, fees, and living expenses, making it the most comprehensive term for this context.

Fill in the blank: ________ is the long-term failure to repay a loan, affecting the borrower's credit score.

• Default

• Delinquency

• Non-payment

• Bankruptcy

Answer explanation

Default is the term used for the long-term failure to repay a loan, which significantly impacts the borrower's credit score. Delinquency refers to late payments, while bankruptcy is a legal status, not a repayment failure.

Fill in the blank: ________ allows a borrower to pause federal student loan payments without accruing interest on subsidized loans.

• Deferment

• Forbearance

• Rehabilitation

• Income-driven repayment

Answer explanation

Deferment allows borrowers to temporarily pause federal student loan payments without accruing interest on subsidized loans, making it the correct choice. Forbearance, on the other hand, may result in interest accrual.

Fill in the blank: ________ is the status of being behind on loan payments.

• Delinquency

• Deficiency

• Negligence

• Redundancy

Answer explanation

Delinquency refers specifically to the status of being behind on loan payments, making it the correct choice. Deficiency, negligence, and redundancy do not relate to loan payment status.

Fill in the blank: ________ Plus Loans are available to graduate students and parents of undergraduates to help pay for education costs.

• Direct

• National

• Federal

• Student

Answer explanation

Direct Plus Loans are specifically designed for graduate students and parents of undergraduates to cover education costs, making 'Direct' the correct choice in this context.

Fill in the blank: A Direct ________ Loan is where the government pays interest while the student is in school.

• Subsidized

• Unsubsidized

• Federal

• Private

Answer explanation

A Direct Subsidized Loan is a type of federal student loan where the government covers the interest while the student is enrolled in school, making it more affordable for borrowers.

Fill in the blank: A Direct ________ Loan requires the student to pay interest while in school.

• Unsubsidized

• Subsidized

• Consolidated

• Income-Driven

Answer explanation

A Direct Unsubsidized Loan requires the student to pay interest while in school, unlike Subsidized Loans, where the government covers interest during that time.

Fill in the blank: ________ is when a portion of a student loan is paid out to the student's account or directly to the borrower.

• Disbursement

• Consolidation

• Deferment

• Refinancing

Answer explanation

Disbursement refers to the process of paying out a portion of a student loan to the student's account or directly to the borrower, making it the correct choice for the blank.