Take a Student Loan Quiz and Enter to Win a $50 Prepaid Mastercard


Paying for College / Friday, April 12th, 2013

Free money for collegeI’ve written before about our goal to pay for our kids’ college without using debt.

See: What Does College Cost? One Family’s First Year Expenses and One Family’s Second Year Expenses

Our daughter is about to finish her junior year so we’re nearly halfway there.

But since our son is still in the process of deciding where to go to college and since I write this blog on personal finance, I’ve been educating myself on the ins and outs of student loans.

Here is some of the information I’ve gathered, presented in quiz style to keep with the college theme.

How many can you get right?

1. Federal student loans have interest rates that are?

A. Fixed
B. Variable
C. Both A & B

2. Federal student loans are?

A. Subsidized loans
B. Unsubsidized loans
C. Both A & B

3. Which of the following is true about the FAFSA?

A. There is no fee required to file a FAFSA.
B. FAFSA forms are required by all students.
C. Both A & B.

4. You have to begin paying back your student loans while you’re still in school

A. True
B. False
C. It depends

5. How many people miss their first student loan payment?

A. 1 in 3
B. 1 in 4
C. 1 in 2

6. Which of the following are awarded based on your credit history?

A. Federal loans
B. Private loans
C. Both

7. You can save money on interest by paying your loan back faster than is required.

A. True
B. False
C. Maybe

8. Which of the following is a good idea for people with student loans?

A. Carefully track your student loans, even while in school.
B. Notify your lender whenever you move.
C. Both A & B

9. Which of the following is a true statement?

A. Private loans sometimes have the school’s name on them.
B. The same lender can offer both private and federal loans.
C. Both A & B

10. Total student loan debt in the US now equals?

A. $1 billion
B. $10 billion
C. $1 trillion

And here are the answers:

1. A. Fixed. Interest rates for federal loans are fixed, while interest rates for most private loans are variable and can change during the life of the loan.

2. C. Both. Federal student loans come in both subsidized (Perkins and Subsidized Stafford) and unsubsidized (Unsubsidized Stafford and PLUS) loans. The main difference is that with subsidized loans, interest on the loan won’t accrue while you’re in school.

3. A. There is no fee. FAFSA stands for Free Application For Student Aid and there is no cost to file one. While no student is required to file a FAFSA, you must do so to find out which federal grants and loans you are eligible for.

4. C. It depends. Students who take out federal loans do not have to being payments while they’re still in school (although interest may be accruing in some cases). Many private loans require that students begin payments while still in school.

5. A. 1 in 3.  Students can avoid this by setting up automatic payments through their banks.

6. C. Both. Kind of. Neither Perkins and Stafford federal loans (both subsidized and unsubsidized) are awarded based on your credit history, but federal PLUS loans and many private loans are.

7. C. Maybe. There are no prepayment fees for federal loans, but some private loans may have them.

8. C. Both. These habits keep you from missing payments, which can cost you money or negatively affect your credit history.

9. C. Both. It’s not always easy to tell which is a private loan and which is a federal loan, and since there can be big differences between them, it’s important to do your homework.

10. C. $1 trillion. The amount of student loan debt in the US now exceeds the amount of credit card debt.

Enter to win a $50 Gift Card

Much of the information in this quiz was provided by the nice people at H&R Block. They have more information for parents and students on their H&R Block Dollars & Sense website and Facebook page.

Screen Shot 2013-04-11 at 7.35.35 PM

And they’ve also offered to give a $50 H&R Block Emerald Card to one lucky Family CEO reader.

All you have to do to enter is leave a comment on this post answering one of the following:

  • How’d you do on the quiz? Any of the answers surprise you?
  • Do you have college bound kids? How are you talking to your kids about student loans?

I’ll used the random number generator at Random.org to choose a winner next Friday, April 19, at 10pm CST. I’ll announce the winner on the blog and on the Family CEO Facebook page.

Good luck!

44 Replies to “Take a Student Loan Quiz and Enter to Win a $50 Prepaid Mastercard”

  1. I did well on the quiz, only because this is within recent memory for our family. We went to great lengths to keep our two children out of college debt. It was a family effort. They each graduated with less than $5000 in debt and promptly paid it off. A side benefit of this process is that they now abhor debt of any kind and are almost debt free at ages 27 and 30. (Our son, 27, does have a 10-year mortgage which he is working on paying off early. Can you imagine owning your own home free and clear at 37?!)
    I read your blog often and use many of your financial techniques and agree with your overall philosphy. Thank you for your frequent postings. I have learned from some and had my philosphy and actions confirmed by others. Best wishes as you follow your frugal journey.

  2. thanks for this quiz! The subsidized/unsubsidized was helpful, as I’d been curious of the difference. While we aren’t planning to use loans at this time (my son enters college this fall), we did wonder about that when he got some information from schools that said he’d qualified for (small) ones of each type.

  3. I don’t have kids in college, but I am a kid in college :) I’ve had to navigate my way through all of the student loan business by myself and so far I have done fairly well. I definitely wish I knew when I started what I know now about paying off my loans or not using loans at all!

  4. i don’t have kids in college, but my husband and i both have student loans! we are working hard to pay off our debts quickly (i have about $12k in student loans and under $10k on a car loan and he has almost $70k in student loans!). unfortunately, the bulk of his loans are private, which is why question #9 was so interesting to me!

  5. I did better than I thought that I would. It doesn’t surprise me that student loan debt exceeds credit card debt because we as young adults are not being taught about the lasting effects of debt. My husband and I are currently following the teachings of Dave Ramsey in hopes to get out of debt and pass these values along to our children. Thank you for all that you do and for the giveaway.

  6. I knew quite a bit, probably because of my own long-term loan experience. But mine are all federal, so I did learn a bit about the private student loan industry through this.

  7. I have s college senior for who has just now taken out a private loan for 2 nd semester of senior year (public university) I’m pleased to have gotten 7/8 of the way through for him with no debt. Next up is a high school senior going to a private university in the fall. Freshman year is all set, and I hope to go from working part-time to full-time soon to cover the rest of her years with as little debt as possible, if any. Lastly, high school freshman, who hopefully will also reap the benefits of mom working full time. I did pretty well on the quiz, and talk to ur kids a lot about the downfalls of debt. thanks for your great website!

  8. It has been quite a few years since I have been in college and had forgotten or didn’t know a lot of the information on the quiz. I was very fortunate to make it through college with one $3,000 subsidized loan that I was able to pay off very quickly. Even back then as a 19 year old, I remember being very scared to take out that loan (my husband and I still don’t take out loans except for the mortgage)! Our children are still young, but I know the importance of thinking about the future for them NOW.

  9. I was shocked by how many first payments are missed! Our first will start college in two years. I hope she can do it without debt.

  10. I have a lot to learn about student loans! I know about FAFSA, but I need to educate myself more about this part of paying for higher education.

  11. I have a 9th and a 6th grader. Both kids know that they need to go to a state college so my husband and I can afford to pay for their tuition from our savings and then they won’t have student loan debt.

  12. I’m not surprised that so many students miss their first payment. Privacy rules make it hard to differentiate between an official mailing of a bill and the endless stream of junk offers that arrive from the loan issuer. For the month that Chase owned my Stafford loan, I received twelve different offers in the mail from them.

    Plus, you are assuming the mail actually arrives in the first place. One of the causes for the poor shape my credit is in is because the pst office where I grew up would reject mail that had the address spelled wrong. I’ve had debts where the first notice I ever received was from a debt collector taking me to court!

  13. I did pretty well, though I was surprised that both private and federal loans award loans based on credit history. My husband and I are chipping away at $30,000 in student loan debt after a BA, masters and PhD. When my husband went on to get his PhD, we vowed no more student loans, even though I was the only one working. During his PhD, my husband picked up extra jobs to tackle the student loan tab, which at the time started at $55,000, and we’ve paid off $25,000! We now have a three month old son, and have opened an Iowa 529 Plan for him. I want to be smarter with my son than we were when we went to college. Lots of college savings, apply for a variety of scholarships, and if the college is just too expensive, pick another school. Life is too hard after graduation to get your feet on the ground… paying back student loans can make that transition that much harder.

  14. A great quiz. I did pretty well. However student loans don’t just apply to new college students, but also graduate students as well. I found myself at 36 entering grad school and applied for a student loan. I qualified, but at 6.75%. I decided that I would be better off using my excellent credit and 0% credit cards to pay for school instead of incurring student loan debt. Did you also know that student loan debt is typically NOT forgiven in bankruptcy!

  15. I did well on the quiz since I have twin sons who have graduated from college but have one more in college at this time. My husband and along with our sons, have worked very hard to not have student loan debt. For us, with 3 children, we decided that two years of Jr. College for all of our boys would help us tremendously financially.

  16. I did so-so on the quiz, and the answers did surprise me a little bit :) I have a 15 year old daughter, 12 year old son, and 6 year old daugthter. College is constantly on my mind and I’m always stressing about it.

  17. I did ok on the quiz. I paid off my loans already, but was interested in seeing the quiz! I hope when I eventually have kids and they get to college age that it isn’t a hopeless situation…

  18. I did well on the quiz! But, I constantly look at this stuff and keep up on it, not only for my kids (10 and 13), but also for myself…I’m wanting to go back to college too!

  19. I am actually going back to school as a stay at home mom and single mom I need to earn more income. I was worried about my credit due to my divorce so was glad to know I have some options. Thank you

  20. I did well on the quiz. None of the answers were particularly surprising. My son is still quite a few years from college, about 10, but we’re already preparing. We opened a 529 for him a few years ago, and deposit money automatically each month. It’d be nice to think that we won’t need loans, what with the saving and all, but it really depends on how much the price of tuition rises, and whether he can get a scholarship.

  21. I have a high school senior. We’ve been using your “What it Costs” posts as starting points for discussions. We are strongly encouraging skipping loans. Because loans are in the news so much, she assumed she would have them.

  22. I did well on the quiz – I’ve done a lot of research since my husband and I are swimming in his doctorate student loans – we basically have two mortgages!

  23. Whew – I did well on the quiz. We’re a young couple in our 20s, but we have a loooot of student loans in between us (made up of undergraduate loans, 2 masters degrees, and so far, 2 years of med school for my hubs) so we’re hustling to try to do as best we can with all of that!

  24. I did well on the quiz but unfortunately the knowledge comes from dealing with all of our student loans! One law degree paid off and one to go!

  25. I got most of the questions correct. I’ve been dealing with student loans for a while. I’m not surprised with the $1 trillion dollars of student loan debt, I remember friends taking every penny possible and spending without really thinking. Still trying to get through my PhD without accumulating too much more!

  26. I did well on the quiz becasue I am a graduate student using loans.
    My daughter is going to college this afll and we are trying to ork out as many options as we can in order for her to not take out any loans. Lots of piecemeal work in the form of scholarships, etc. Hopefully we win so we can add it to the tuition!

    Thank you for your blog!

  27. Thankfully, my kids are through with school (except two of the three plan on post graduate degrees down the road). The sad thing is, many come out of college with high student loan debt and can’t find a job. I’ve been the “victim” of having adult children move back in with me because of the job market. It all worked out well in the end :)

    Laurie

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