Borrowing Basics
What is a borrower's responsibility?
Making on-time payments to avoid late fees and damage to credit scores.
What helps maintain a good credit score?
Always making timely payments on borrowed money.
What is the first step in completing the FAFSA?
Creating an FSA ID to access and sign the FAFSA online.
What is the best way to avoid credit card debt?
Paying your credit card balance in full each month.
What does interest represent?
The price paid for borrowing money from a lender.
What is a key feature of federal student grants?
They are need-based and do not require repayment.
What negatively affects your credit score?
Carrying high credit card balances and missing payments.
How often must students submit a new FAFSA application?
Every academic year.
What is necessary for low-risk borrower status?
Keeping credit utilization below 30%.
What is the key characteristic of subsidized loans?
They do not accrue interest while you are in school.
What is required for private student loans?
A cosigner or established credit history.
What is the importance of credit utilization?
Keeping credit utilization below 30% helps maintain a low-risk borrower status.
What determines Pell Grant eligibility?
Financial need.
How to maintain a positive credit profile?
Paying off your credit card debt each month.
What distinguishes a grant from a loan?
A source of financial aid that typically does not require repayment.
What is the price paid for borrowing money?
Interest.
What does a credit score represent?
A number assigned to every borrower used by lenders to determine loan decisions.
What distinguishes scholarships from other financial aid?
Scholarships are awarded based on academic or other achievements.
What is the impact of making only minimum payments?
It can lead to accumulating debt and paying more in interest over time.
What is a scholarship?
A financial award based on academic or other achievements that does not require repayment.
What is a key difference between federal and private loans?
Federal student loans typically offer lower interest rates and more flexible repayment options than private loans.
What practices build your credit score?
Keeping your balances below the credit limit.
What is the primary purpose of the FAFSA?
To determine eligibility for federal, state, and institutional financial aid.
Why is maintaining good credit important?
It increases your ability to borrow money and secure lower interest rates.
What is the difference between a grant and a scholarship?
Scholarships are based on specific achievements, while grants are generally need-based.