Quiz: College and Education Planning
Test your understanding of college and education planning concepts.
1. What is the difference between a college's sticker price and net price?
- They are the same thing
- Sticker price is the published cost; net price is what you actually pay after scholarships and grants
- Net price includes room and board; sticker price doesn't
- Sticker price is per semester; net price is per year
Show Answer
The correct answer is B. The sticker price is the advertised total cost of attendance (tuition, fees, room, board). The net price is what you actually pay after subtracting scholarships and grants (free money that doesn't need to be repaid). Net price calculators on college websites estimate your real cost and are much more useful than sticker price when comparing schools. A $75,000 sticker price school might cost less than a $25,000 school depending on financial aid.
Concept Tested: Net Price Calculator
2. What is the main difference between scholarships and grants?
- Scholarships are merit-based; grants are typically need-based
- Scholarships must be repaid; grants don't
- Grants are only for graduate students
- Scholarships are only for athletes
Show Answer
The correct answer is A. Scholarships are generally merit-based awards given for academic achievement, athletic ability, talents, or other accomplishments. Grants are typically need-based awards given based on financial circumstances. Both are "free money" that doesn't need to be repaid, making them the best types of financial aid. Some scholarships consider both merit and need. You should apply for as many scholarships as possible to minimize borrowing.
Concept Tested: Scholarships vs Grants
3. What is FAFSA and why is it important?
- A type of student loan
- Free Application for Federal Student Aid—required for federal grants, loans, and work-study
- A scholarship search website
- A college entrance exam
Show Answer
The correct answer is B. FAFSA (Free Application for Federal Student Aid) is the form that determines your eligibility for federal financial aid including Pell Grants, federal student loans, and work-study programs. Many states and colleges also use FAFSA to award their own aid. Filing early (opens October 1) is critical because some aid is first-come, first-served. You must complete FAFSA every year you're in college. It's free—never pay someone to file it for you.
Concept Tested: FAFSA
See: Understanding FAFSA
4. What is the main advantage of federal student loans over private student loans?
- Higher borrowing limits
- No interest charges
- Better borrower protections including income-driven repayment, deferment, and forgiveness programs
- Faster approval process
Show Answer
The correct answer is C. Federal student loans offer significant borrower protections that private loans don't: fixed interest rates set by Congress, no credit check (except PLUS loans), income-driven repayment plans, deferment and forbearance options, loan forgiveness programs, and death/disability discharge. Private loans are credit-based, have variable rates (usually higher), fewer repayment options, and no forgiveness programs. Always maximize federal loans before considering private loans.
Concept Tested: Federal Student Loans
5. You're considering two colleges. College A costs $120,000 total with average starting salary $75,000. College B costs $250,000 total with average starting salary $80,000. Which has better ROI?
- College B because the salary is higher
- College A because it costs less for nearly the same salary outcome
- They have the same ROI
- ROI doesn't matter for education
Show Answer
The correct answer is B. College A provides much better Return on Investment (ROI)—it costs $130,000 less for only $5,000 less in starting salary. You'd recoup that difference in about 2 years while saving over $100,000. College ROI compares the cost of education against career earnings. The most expensive school isn't always the best investment. Many students would be better off at less expensive schools, especially if it means graduating with little or no debt.
Concept Tested: College ROI
See: Calculating ROI
6. Which college major typically has the highest return on investment?
- Liberal arts
- Education
- Engineering and computer science
- Fine arts
Show Answer
The correct answer is C. Engineering, computer science, nursing, and healthcare fields typically offer the highest ROI due to strong job markets and high salaries. A computer science degree might cost $80,000 but lead to a $75,000+ starting salary and $1 million+ career earnings premium. This doesn't mean you shouldn't study what you love, but understand the financial reality and plan accordingly. Your major matters more than where you go to school for financial outcomes.
Concept Tested: College ROI
See: Majors and ROI
7. What is an alternative education path that could offer better ROI than a 4-year degree for certain careers?
- Dropping out of high school
- Trade schools, certifications, apprenticeships, or community college
- Only getting a graduate degree
- There are no alternatives to 4-year degrees
Show Answer
The correct answer is B. Trade schools (electrician, plumber, HVAC), professional certifications (IT, real estate license), apprenticeships (earn while you learn), and community college followed by transfer to a 4-year school can all offer excellent ROI. Many skilled trades pay $50,000-$85,000+ with minimal training costs ($5,000-$30,000 total) and no student loan debt. Not everyone needs a 4-year degree to have a successful, well-paying career.
Concept Tested: Alternative Education Paths
See: Alternative Pathways
8. What is a key advantage of starting at community college and transferring to a 4-year university?
- Community college credits don't transfer
- You get a different degree
- You save $40,000-$80,000 on the first two years while getting the same bachelor's degree
- Community college is more prestigious
Show Answer
The correct answer is C. Starting at community college for general education requirements (~$10,000 for 2 years) then transferring to a 4-year university for your major saves $40,000-$80,000 compared to attending the university for all 4 years. You graduate with the same bachelor's degree (diploma only shows graduating institution). Keys to success: verify transfer agreements before enrolling, meet with transfer advisor regularly, and maintain good GPA for admission.
Concept Tested: Alternative Education Paths
9. You receive a financial aid package offering $10,000 in scholarships, $5,000 in grants, $8,000 in federal loans, and $10,000 in private loans. How much is "free money" you don't have to repay?
- $33,000 (all of it)
- $15,000 (scholarships and grants)
- $23,000 (scholarships, grants, and federal loans)
- $10,000 (just scholarships)
Show Answer
The correct answer is B. Only scholarships ($10,000) and grants ($5,000) are "free money" that doesn't need to be repaid—total of $15,000. Federal loans ($8,000) and private loans ($10,000) must be repaid with interest. When reviewing financial aid packages, distinguish between gift aid (scholarships/grants) and loans. Don't borrow more than necessary—just because loans are offered doesn't mean you have to accept them. Work during school and live frugally to minimize borrowing.
Concept Tested: Scholarships and Grants vs Loans
10. What should you do before taking out student loans?
- Borrow the maximum amount offered
- Calculate if entry-level salary in your field can handle the loan payments
- Not worry about it until after graduation
- Only take private loans because they're easier
Show Answer
The correct answer is B. Before borrowing, research typical starting salaries in your intended career and calculate whether you can afford the loan payments on that salary. A good rule of thumb: don't borrow more in total than your expected first-year salary. If you'll need $100,000 in loans but entry-level jobs pay $35,000, that degree isn't a good investment. Think long-term about whether you can afford repayment—student loans can't be discharged in bankruptcy and will follow you for decades.
Concept Tested: College ROI and Student Loans