1
lesson pretestMultiple Choice

Pretest

Question 1 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

One reason a student may seek a federal student loan instead of a private student loan is that

Answer
A
private loans are only available to parents, while federal loans may be issued to the student.
B
federal loans must be paid back more quickly than private loans.
C
private loans carry a higher interest rate than federal loans.
D
federal loans are obtained by banks, while private loans are backed by the government.

Explanation

Federal student loans often have lower, fixed interest rates and more borrower protections than private loans. Private loan rates can vary and may be higher, so a student may prefer a federal loan. The other choices reverse how the loans work or incorrectly describe repayment rules.

AI-written and checked against the verified answer.

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