#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 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.
#16
What is the main advantage of a prepaid tuition plan for college savings?
Locking in tuition rates
ExplanationGuaranteed tuition rates regardless of future increases.
#17
What is the advantage of a custodial account (UTMA/UGMA) for college savings?
No contribution limits
ExplanationFlexibility with no limits on contributions.
#18
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.
#19
What is the penalty for defaulting on a federal student loan?
Garnishment of wages and tax refunds
ExplanationLegal action to recover unpaid loans.
#20
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.
#21
What is the maximum annual contribution limit for a Roth IRA account?
$7,000
ExplanationAnnual limit for contributions to a Roth IRA.