10
lesson pretestMultiple Choice

Pretest

Question 10 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

How is a federal loan different from a private loan for an education?

Answer
A
A federal loan can be used to pay for a student’s tuition and any other expenses. A private loan can only be used to pay for a student’s tuition.
B
A federal loan is only available for students who show a need. A private loan is available for any student who meets the bank’s lending standards.
C
A federal loan is available for any student who meets the government’s lending standards. A private loan is only available for students who show a need.
D
A federal loan can only be used to pay for a student’s tuition. A private loan can be used to pay for a student’s tuition and any other expenses.

Explanation

Federal student loans are offered through the government, and some types are available based on financial need. Private education loans come from banks or other lenders, which generally decide eligibility using their lending standards, such as creditworthiness. Therefore, choice D correctly distinguishes need-based access to federal aid from a private lender’s approval criteria.

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