What is a parent loan Everfi answer?
The Correct Answer and Explanation is :
A Parent Loan in the context of EverFi refers to a loan that parents can take out to help pay for their child’s education expenses, typically at the college or university level. These loans are also known as Parent PLUS loans and are a federal student loan option available to parents of dependent undergraduate students. The U.S. Department of Education offers these loans, and they allow parents to borrow money to cover tuition, fees, room and board, and other education-related costs that aren’t covered by other financial aid.
Key Features of Parent Loans (Parent PLUS Loans):
- Eligibility: The loan is available to the parent (biological or adoptive) of a dependent undergraduate student who is enrolled at least half-time in an eligible program. The student must have a valid FAFSA (Free Application for Federal Student Aid) on file, though parents do not need to demonstrate financial need to be eligible for a Parent PLUS loan.
- Loan Limits: Parents can borrow up to the full cost of the student’s education, including tuition, fees, room and board, and other associated costs, minus any other financial aid the student has received.
- Interest Rate: Parent PLUS loans have a fixed interest rate set by the federal government. The interest rate may change yearly, but it remains the same for the life of the loan once disbursed.
- Repayment Terms: Repayment begins immediately, although parents can defer payments while the student is in school for at least half-time. The loan is typically repaid over 10 years, but there are options to extend or modify repayment plans if necessary.
- Credit Check: Parent PLUS loans require a credit check, and a loan may not be granted if the parent has an adverse credit history. However, parents can still qualify with a co-signer or by providing additional documentation.
Explanation:
Parent PLUS loans help make college more affordable for families who may not have enough savings or financial resources to cover the full cost of tuition and living expenses. While these loans allow parents to borrow significant amounts, they also carry the responsibility of repayment, which can affect the parent’s financial situation after their child graduates. Understanding the terms, interest rates, and repayment options is crucial before committing to a Parent PLUS loan.