#1
What is a common type of financial aid that does not need to be repaid?
Scholarship
ExplanationNon-repayable financial assistance based on merit or need.
#2
What is the purpose of creating a budget?
To track income and expenses
ExplanationTo monitor and manage money by recording income and spending.
#3
What does FAFSA stand for in the context of college financial aid?
Free Application for Federal Student Aid
ExplanationGovernment form to determine eligibility for student financial aid.
#4
What is the purpose of a FAFSA?
To apply for financial aid for college
ExplanationApplication for federal student financial aid.
#5
Which of the following accounts typically offers the highest interest rate?
Certificate of deposit (CD)
ExplanationA time deposit with a fixed interest rate and maturity date.
#6
What is the purpose of a 529 plan in college planning?
To save for college expenses
ExplanationTax-advantaged savings plan for education costs.
#7
What is the purpose of a Roth IRA?
To save for college expenses
ExplanationTax-advantaged individual retirement account for long-term savings.
#8
What is the 'Rule of 72' used for in personal finance?
To estimate how long it takes for money to double at a given interest rate
ExplanationQuick formula to estimate investment doubling time.
#9
Which of the following is NOT considered a type of financial aid?
Credit card
ExplanationCredit cards are a form of borrowing, not financial aid.
#10
What is the difference between subsidized and unsubsidized student loans?
The government pays the interest on subsidized loans while the student is in school
ExplanationInterest assistance during and after school for subsidized loans.
#11
Which of the following is NOT a factor that affects your credit score?
Income level
ExplanationWhile important, income level is not directly considered in credit scoring.
#12
What is the purpose of the FICO credit scoring system?
To assess credit risk for lenders
ExplanationStandardized system to evaluate creditworthiness.
#13
Which of the following is NOT a potential consequence of defaulting on student loans?
No impact on credit score
ExplanationDefaulting negatively affects credit score and financial standing.