#1
Which of the following is an example of a fixed expense?
Rent
ExplanationA fixed expense remains constant and is regularly incurred, such as rent.
#2
What is the purpose of a 529 savings plan?
To save for higher education expenses
ExplanationA 529 savings plan is designed to help individuals save for future higher education expenses.
#3
What is a grace period for credit card payments?
The time after the due date during which no interest is charged
ExplanationA grace period for credit card payments is a period where no interest is charged on purchases, typically after the due date.
#4
What does EFC stand for in the context of financial aid?
Expected Family Contribution
ExplanationEFC stands for Expected Family Contribution, which is the amount a family is expected to contribute toward their child's education costs.
#5
What does FAFSA stand for in the context of higher education financing?
Free Application for Federal Student Aid
ExplanationFAFSA stands for Free Application for Federal Student Aid, which is a form used to apply for financial aid for higher education.
#6
Which type of student loan requires a credit check?
Private student loan
ExplanationPrivate student loans typically require a credit check unlike federal loans.
#7
What is the difference between a subsidized and an unsubsidized federal student loan?
The government pays the interest on subsidized loans while the student is in school, but not on unsubsidized loans.
ExplanationSubsidized federal student loans have the government covering interest payments while the student is in school, whereas unsubsidized loans accrue interest during that time.
#8
What is the APR (Annual Percentage Rate) on a loan?
The interest rate plus any additional fees and costs associated with the loan
ExplanationThe APR represents the total cost of borrowing, including interest and other fees, expressed as an annual percentage.
#9
What is the concept of 'compound interest'?
Interest calculated on both the initial principal and the accumulated interest
ExplanationCompound interest refers to interest calculated on the initial amount as well as the accumulated interest over time.
#10
What is the 'grace period' for student loans?
The period during which students can defer loan payments
ExplanationA grace period for student loans is the time during which students can delay making loan payments without incurring penalties.