Question

MC)

Which best describes the difference between a federal student loan and a 529 plan?
Group of answer choices

A federal student loan is taken out with the government and paid back with interest, while a 529 plan is a savings plan designed to save as much money as possible before college.

A federal student loan is based on income and financial need, while a 529 plan is based on academic achievement and has no financial eligibility requirements.

A federal student loan is based on your financial need and does not require repayment, while a 529 plan has no income requirements and will need to be paid back at a fixed interest rate.

A federal student loan is a savings plan designed by the government, while a 529 plan is a savings plan used by private banks.

Answer 1

Answer: A federal student loan is taken out with the government and paid back with interest, while a 529 plan is a savings plan designed to save as much money as possible before college.

Step-by-step explanation:

The reason behind this is that a federal student loan is a form of financial aid provided by the government to help students pay for their education. These loans need to be repaid, usually with interest, after the student graduates or leaves school.

On the other hand, a 529 plan is a tax-advantaged savings plan specifically designed for education expenses. Contributions to a 529 plan can grow tax-free, and withdrawals for qualified education expenses are also tax-free. These plans are not loans and do not need to be repaid. They are intended to help families save for future education costs, rather than borrowing money to cover those costs.