#1
Which of the following is a common type of college savings account?
529 plan
ExplanationTax-advantaged savings plan specifically for education expenses.
#2
What is the primary purpose of a FAFSA form?
To apply for federal financial aid
ExplanationApplication for various federal financial aid programs.
#3
Which type of student loan generally has a lower interest rate: federal or private?
Federal
ExplanationFederal loans usually offer lower interest rates.
#4
What does EFC stand for in the context of financial aid for college?
Expected Family Contribution
ExplanationThe amount a family is expected to contribute toward education.
#5
Which federal agency oversees the Federal Student Aid program?
Department of Education
ExplanationResponsible for federal aid programs.
#6
Which of the following is NOT a type of federal student loan?
Perkins Loan
ExplanationNo longer available but was a federal loan program.
#7
Which federal agency provides grants to help cover the cost of college for eligible students with financial need?
Department of Education
ExplanationOffers grants based on financial need.
#8
What is the recommended ratio of stocks to bonds in a college savings portfolio?
75% stocks, 25% bonds
ExplanationBalancing risk and return for long-term growth.
#9
What is the purpose of a Coverdell Education Savings Account (ESA)?
To pay for qualified education expenses
ExplanationTax-advantaged account for educational expenses from K-12 to college.
#10
What is the maximum contribution limit for a Coverdell Education Savings Account (ESA) per beneficiary per year?
$2,000
ExplanationAnnual limit per beneficiary for tax-free growth.
#11
Which of the following is NOT a qualified education expense for a 529 plan?
Student loan payments
ExplanationStudent loan payments are not covered by a 529 plan.
#12
Which of the following is NOT a factor typically considered in financial aid calculations?
Student's academic performance
ExplanationAcademic performance is not usually a factor in need-based aid.
#13
What does the term 'net price' refer to in the context of college costs?
The total cost of attendance minus grants and scholarships
ExplanationActual cost after subtracting aid.
#14
What is the Free Application for Federal Student Aid (FAFSA) deadline for the academic year starting in fall 2024?
June 30, 2024
ExplanationDeadline for FAFSA submission for the 2024-2025 academic year.
#15
What is the main difference between subsidized and unsubsidized federal student loans?
Subsidized loans accrue interest while the student is in school, but unsubsidized loans do not
ExplanationInterest accrues differently during enrollment.
#16
What is the purpose of the CSS Profile in the financial aid process?
To assess eligibility for institutional financial aid
ExplanationUsed by colleges to determine non-federal financial aid.
#17
What is the main advantage of a 529 plan over a custodial account (UTMA/UGMA) for college savings?
Tax-free withdrawals
ExplanationWithdrawals are tax-free for qualified educational expenses.
#18
What is the purpose of the Lifetime Learning Credit?
To encourage lifelong learning by providing a tax credit for tuition and fees
ExplanationTax credit for educational expenses beyond undergraduate studies.
#19
What is the penalty for withdrawing funds from a 529 plan for non-qualified expenses?
10% penalty on earnings plus income tax
ExplanationTax penalty and income tax for non-qualified withdrawals.
#20
What is the main advantage of a prepaid tuition plan for college savings?
Locking in tuition rates
ExplanationGuaranteed tuition rates regardless of future increases.
#21
What is the advantage of a custodial account (UTMA/UGMA) for college savings?
No contribution limits
ExplanationFlexibility with no limits on contributions.
#22
Which of the following is NOT a repayment plan option for federal student loans?
Variable Interest Repayment Plan
ExplanationNot a standard repayment option for federal loans.
#23
What is the penalty for defaulting on a federal student loan?
Garnishment of wages and tax refunds
ExplanationLegal action to recover unpaid loans.
#24
What is the maximum annual amount a dependent undergraduate student can borrow in federal Direct Subsidized Loans?
$5,500
ExplanationAnnual limit for subsidized loans for dependent undergraduates.
#25
What is the maximum annual contribution limit for a Roth IRA account?
$7,000
ExplanationAnnual limit for contributions to a Roth IRA.