Debt and College

Question 1

How does debt affect a client’s financial situation?

Answer 1

Obtain items they wouldn’t otherwise be able to obtain. Creates obligaton to repay.

Question 2

Tax implications of mortgages

Answer 2

Points are tax-deductible. Cap gains may be income tax free.

Question 3

Costs / Benefits of Refinancing

Answer 3

Benefits are greatest if interest rates are lower because monthly payments decrease and increase costs do to.

Question 4

Open-end lease

Answer 4

Open end includes the possibility that the lessee may face an expense at the termination, if the actual value of the leased item was different from the original value projected.

Question 5

Closed-end lease

Answer 5

Free to walk away from the leased asset without additional cost. Can include mileage provisions.

Question 6

Stafford loans

Answer 6

Available to graduates and undergraduates. Subsidized - interest is deferred during period of schooling and 6 months following. Private or federal. Repayment normally 10 years.

Question 7

PLUS Loans

Answer 7

For parents of students. Available through private lenders. Available for undergraduate students. Must be full-time student. Loans can be made directly to grad and professional students.

Question 8

True or false: a parent loan cannot be consolidated with student loans and become the student’s responsibility.

Answer 8

True.

Question 9

True or False: Balloon Mortgage is a fixed payment the whole time.

Answer 9

False. Big payment at the end.

Question 10

Pell Grants

Answer 10

Full time, part time, undergrad.

Question 11

True or False: Liability insurance for a lease is typically higher than normal.

Answer 11

True.