In a Nutshell

MEFA, short for Massachusetts Educational Financing Authority, offers private, fixed-rate student loans to students in all 50 states. It caters mainly to borrowers with co-signers with strong credit. Its rates are highly competitive, with many student loan borrowers receiving lower rates than they would at other lenders. It also offers two savings plans – one nationwide and the other exclusive to Massachusetts residents.

MEFA at a Glance

Loan types: Undergraduate, graduate

APRs: 5.35% - 7.95% Fixed

Repayment terms: 10-15 years

Loan amount: Up to 100% of cost of attendance

Origination fees: No

Loan Rates and Fees

MEFA only offers fixed rates, with no variable-rate option. Borrowers will pay up to 6.99% - which is significantly less than the typical 10-12% maximum rate charged by other student lenders. This is both good news and bad news. If you qualify, then you’re guaranteed a competitive rate. However, it does mean you and your co-signer need very good credit to get approved for a loan.

Interest rates are determined by the following factors: the co-signer’s and borrower’s credit profile (with the co-signer being the most important), the repayment term, and the repayment type. See the next section for more information on the repayment terms and options.

Repayment Options

Undergraduates are given five repayment options:

• Immediate repayment (10-year term). Payments begin immediately when the loan closes.
• Immediate repayment (15-year term). As above, but with a longer repayment term.
• Interest-only repayment (15-year term). Interest-only payments during studies, followed by commencement of interest and principal after graduation.
• Deferred repayment (15-year term). Payments commence after graduation.
• Deferred repayment with co-borrower release (15-year term). As above, but also includes co-signer release option (See “Co-Signer Options” below for more info).

Graduate borrowers have two options:

• Interest-only repayment (10-15 year term). Interest-only repayments for the in-school period, as defined in the MEFA Graduate Loan Application and Solicitation Disclosure.
• Deferred payment. Payments begin after graduation, as above.

Discounts and Rewards

MEFA offers two tax-advantaged savings plans, one for Massachusetts residents and the other nationwide. U.Plan Prepaid Tuition (Massachusetts only) is a prepaid tuition program that offers tax advantages and lets you save for college while locking in today’s rates. U.Fund College Investing Plan (nationwide) is a 529 college savings plan offering flexibility and tax advantages.

Application Process

MEFA’s online loan application portal makes it easy and fast to apply for a student loan. Once you and your co-signer have completed all sections of the applications, MEFA will provide an instant credit decision. You can exit and resume your or your co-signer’s application at any time.

To qualify, you must:

• Be a citizen or permanent resident of the United States;
• Meet MEFA's current credit approval standards;
• Maintain satisfactory academic progress as defined by the college or university; and
• Be enrolled at least half time in an accredited degree-granting undergraduate program at an eligible non-profit college or university in the United States. (If the student is currently enrolled for the current academic year, a student may borrow a MEFA Loan for the summer session or borrow a MEFA Loan to cover a past due balance within the current academic year)

Co-Signer Options

MEFA recommends bringing along a co-signer (which it actually refers to as a “co-borrower”) to help meet the credit requirements. Under the Student Deferred Repayment with Co-Borrower Release program, the co-signer/co-borrower may request release after the first 48 consecutive on-time monthly installments have been made and if meeting then-current underwriting standards. All other loan options require the co-signer/co-borrower to stay on until the end of the repayment term.

Customer Service

As the Massachusetts authority on educational financing, MEFA offers guidance and support to students in Massachusetts and other states. To speak to a MEFA expert about loans or other forms of student financial assistance, call 800-266-0243, Monday to Friday, 8am-8pm ET, or email mefaloans@mefa.org.

About MEFA

The Massachusetts state legislature created MEFA in 1982 at the request of colleges and universities across the state. From the start, MEFA’s mandate has been to offer low-cost college financing to families of aspiring college students. Today, MEFA offers student loans and savings plans to students nationwide, with additional savings plans and guidance exclusive to Massachusetts students.

Summary

Although it caters mainly to Massachusetts students, MEFA makes competitive fixed-rate loans available to borrowers across the country. It isn’t easy to qualify. However, if you have a co-signer such as a friend or relative with strong credit, then the fixed-rate APRs here are as good as you’ll find virtually anywhere else.