Category 1: Types of Loans
What is a student loan?
A student loan is money borrowed to pay for school-related expenses, like tuition, fees, and books, that must be paid back with interest.
What is an interest rate?
An interest rate is the extra money you pay for borrowing money, shown as a percentage.
What is the typical loan repayment start time for a 4-year degree?
How many months/years?
Repayment usually starts 6 months after graduation.
If Sarah borrows $150,000 for a 4-year university and $50,000 for a community college, how much more would she pay for the 4-year university?
$100,000.
You want to buy a pair of shoes that costs $80. The store is offering a 25% discount. How much will you pay for the shoes after the discount?
$80 - (25% of $80) = $80 - $20 = $60
What’s the main difference between federal and private student loans?
Federal loans usually have lower interest rates and more flexible repayment options than private loans.
What is the key feature of a fixed interest rate?
A fixed interest rate stays the same for the life of the loan.
What is the monthly payment for a $10,000 loan at 5% interest over 10 years?
$250 (5% of $5,000)
If Liam borrows $12,000 for a private college and $8,000 for a community college, how much more will he owe for the private college?
$4,000.
Your monthly budget is $2,500. You pay $1,000 for rent, $250 for utilities, $350 for groceries, and $100 for your phone bill. How much money do you have left for savings or entertainment?
$2,500 - $1,000 (rent) - $250 (utilities) - $350 (groceries) - $100 (phone bill) = $800 left for savings or entertainment.
Which type of loan has higher interest rates, federal or private loans?
Private loans usually have higher interest rates than federal loans.
What happens to the interest rate on private loans over time?
The interest rate on private loans can change over time (it can go up or down).
What is the monthly payment for a $10,000 loan at 5% interest over 5 years?
$188.71.
If Emily borrows $30,000 for a 4-year program and $10,000 for a 2-year program, how much more would she pay for the 4-year program?
$20,000.
A laptop costs $1,200, and there’s a sale for 15% off the regular price. How much will you save with the discount?
15% of $1,200 = $1,200 × 0.15 = $180 savings.
What type of loan does the government pay interest on while you are still in school?
Subsidized loans.
How much interest is added to a $5,000 loan with a 6% interest rate after one year?
$300 (6% of $5,000).
How much interest will you pay over 1 year on a $2,000 loan at 6% interest?
$120 (6% of $2,000).
If Hannah borrows $120,000 for a private college and $40,000 for a state university, how much more would she pay for the private college?
$80,000.
Your budget is $2,800. Rent is $1,200, utilities are $250, and groceries cost $350. You also have a $200 monthly car payment and $50 for a streaming subscription. How much is left for savings or entertainment?
$2,800 - $1,200 (rent) - $250 (utilities) - $350 (groceries) - $200 (car payment) - $50 (streaming) = $750 left for savings or entertainment.
What is the difference between subsidized and unsubsidized loans?
In subsidized loans, the government pays the interest while you're in school. In unsubsidized loans, you are responsible for the interest, even while in school.
How much would you owe on a $5,000 unsubsidized loan after 3 years at a 6% interest rate?
Multiply and add to get a TOTAL amount owed after 3 years.
$5,618 (the interest adds up each year).
If you borrow $6,000 at 4% interest for 1 year, what is the total amount you will owe after 1 year?
$6,240 ($6,000 + $240 interest).
If Jake borrows $200,000 for a private university (4-years) and $75,000 for an in-state school (4-years), how much more would he pay for the private university after 4 years?
Jake would pay $125,000 more for the private university after 4 years.
You’re shopping for a new phone that costs $800. The store offers a "Buy One, Get One 50% Off" deal. If you buy two phones, how much will you pay for both?
First phone: $800
Second phone: $800 × 0.50 = $400
Total price for two phones: $800 + $400 = $1,200.