MEFA Student Loans and Refinancing Review in 2020

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MEFA Student Loans and Refinancing Review in 2020

The Massachusetts Educational Financing Authority is an American non-profit student loan organization that helps students (and their families) finance their education. Founded in 1982, the state-chartered and self-funded organization has provided their MEFA Student Loans to thousands of families dealing with a lack of education funds.

MEFA currently offers two student loan options – the MEFA Private Student Loan and Student Loan Refinancing. In addition, they provide financial guidance to students’ families, helping them better manage finances.

MEFA Student Loans: Private Student Loans Review

The MEFA Private Student Loan is a good financing option for college, undergrad, and graduate students looking for partial assistance with their education funds.

MEFA student loans are an excellent option for students who are already earning a steady income, or plan to do so as soon as they graduate. This is because despite being generous with their financial aid, the organization doesn’t offer forbearance or deferment. Despite the organization being state-chartered, the MEFA Private Student Loan is available to students from all over the country.

The organization is somewhat restrictive in its interest rates policy, however. MEFA only offers loans at a fixed interest rate, which means that the interest amount will stay the same throughout the loan period.

MEFA Student Loan Details

The MEFA Private Student Loan requires a soft credit check to qualify for it, and to determine the total loan amount that you’ll get.

The total loan term can range from 10 to 15 years, for an amount ranging from $1,500 for public school students and $2,000 (minimum) for private school students. For the latter, borrowers can take out a loan equal to the school’s cost of attendance, after subtracting any other financial aid received.

There is no origination fee or application fee for the MEFA loan as well as no prepayment penalty. In addition, there is no late fee, however, extended failure to make payments may incur a penalty (pending administrator assessment).

MEFA Student Loan Eligibility Criteria

Here are the requirements for the MEFA Private Student Loan:

  • Minimum Income: $25,100 a year (regular monthly income is mandatory).
  • Minimum Credit Score: 670 (higher for bigger loan amounts).
  • Typical Approved Borrower Income: Undisclosed (typically decided on a case by case basis).
  • Qualification Despite Bankruptcy: Applicants can qualify after five years of signing bankruptcy.
  • Maximum Debt-to-Income Ratio: Undisclosed.
  • Citizenship: Applicants must be U.S. citizens or permanent residents.
  • Loan Availability Location: Currently, the loan is available nationwide.

In addition, MEFA requires students to be enrolled in schools that are qualified to receive federal aid. Students also need to be enrolled on, at least, a half-time basis.

MEFA Student Loan Repayment Options

For in-school borrowers, it’s required to start making full monthly payments while the applicants are still in school. There is a 10-15-year loan term that students can adhere to.

In case of deferred repayments, borrowers don’t have to make any until their 6-month grace period has passed. However, you can still make payments during this period, to reduce the overall accrued interest. The interest will accrue during the grace period, and will get added to the principal balance, or capitalize at the end of the grace period. This option is exclusively for the 15-year repayment term.

For deferred loans with a co-signer release, MEFA allows the co-signer to withdraw from the loan agreement after 48 monthly payments (full payments, made on time). This option also only comes with the 15-year loan term.

Finally, the interest is only accrued while the borrower is still in school. After graduation, you only have to pay back the principal amount.

For post-school borrowers, there is a 6-month grace period before you’re required to start making payments. However, this is only for the deferred payment option. In case of in-school deferment, you can choose to defer payments for up to a year, if you have returned to school to earn a higher degree.

Members of the military who are on active duty also receive deferment based on their duty status.

Co-signers can be released from the loan agreement after 48 consecutive payments have been made. This option only comes with the deferred with co-signer release payment plan.

MEFA Student Loans Pros and Cons

Here are some of the reasons why you should, and shouldn’t take out a MEFA Private Student Loan:

Pros

  • Large loan amounts for private school students.
  • No late fees apply.
  • Co-signer release after 48 payments.

Cons

  • Co-signer release only comes with one payment plan.
  • A hard credit check is needed to see if you qualify, and what interest rates you’ll get.

Basically, the loan is best for students who already have a job and a steady income.

The Verdict

Overall, the MEFA Private Student Loan is a good option for borrowers who are already taking steps towards financial freedom. Since there are no forbearance programs available with the loans, borrowers have to keep with the payment schedule, for which it is necessary to plan ahead.

It’s advised that students go through all of their subsidized and unsubsidized federal student loan options, before making a decision on the MEFA offering.

MEFA Student Loan Refinancing Review

For students who need additional funds to continue their studies, MEFA has a competitive student loan refinancing option. MEFA Student Loan Refinancing is unique in the way that it doesn’t allow borrowers to stop payments, and maintains a strict payment schedule.

This is, however, at the benefit of borrowers who would otherwise have to take a hard credit check for a new loan, since MEFA can qualify applicants based on a soft credit check only.

Refinancing, like the private student loan option, is also based on rigid interest rates. The total refinancing loan period is decided individually, on a case by case basis.

MEFA Student Loan Refinancing Details

Refinancing is available after a soft credit check for applicants’ credit history, and borrowers can present their individual case at the time of assessment. The loan terms are 7, 10, and 15 years, depending on individual qualifications. You can refinance from $10,000, up to the total amount required for the course you’re enrolled in.

This facility, however, is only for individual students, and cannot be transferred to the children of borrowers.

There is no origination or loan application fee as well as no applicable late fees.

MEFA Student Loan Refinancing Eligibility Criteria

  • Minimum Income: $24,000 a year (regular monthly income is mandatory).
  • Minimum Credit Score: 670 (higher for bigger refinancing amounts).
  • Typical Approved Borrower Income: Undisclosed (typically decided on a case by case basis).
  • Qualification Despite Bankruptcy: Applicants can qualify after five years of signing bankruptcy.
  • Maximum Debt-to-Income Ratio: Undisclosed.
  • Citizenship: Applicants must be U.S. citizens or permanent residents.
  • Loan Availability Location: Currently, the loan is available nationwide.

MEFA requires borrowers to have repaid loans for a full 12 months before they can apply for refinancing. In addition, the organization disqualifies applicants who apply with a history of defaulting on student loans.

MEFA Student Loan Refinancing Repayment Options

Although MEFA does not support forbearance on a general basis, the organization has recently agreed to work with applicants on a case by case basis to modify their individual payment plans. This is only if long-term affordability is a genuine concern for borrowers.

There is no academic deferment option, although active members of the military can apply for deferment.

Lastly, there is a death or disability discharge, however, it is only provided with a co-sign. In case of accidental disability or death, the co-signer has to take responsibility for repayment. Since this is an income-based repayment plan, the same steady income rules apply for co-signers.

MEFA Student Loans Refinancing Pros and Cons

Here are some of the reasons why you should, or shouldn’t apply for MEFA Student Loan Refinancing:

Pros

  • Borrowers only need a soft check to qualify.
  • There are no applicable late fees.

Cons

  • There is no co-signer release option.
  • Deferment and forbearance are decided on an individual basis and are very rarely granted.

Once again, this is best for borrowers without a college degree, but with stable income.

The Verdict

MEFA has strict rules when it comes to borrowers’ income and monthly payments, especially if you’re looking to refinance loans. They require immediate repayment on all of their financial aid packages. However, their lack of applicable late fees and agreement to work with individual borrowers on variable rates, makes them a good option for an education loan.

Recently, MEFA has introduced an auto-pay feature that allows for bi-weekly loan payments for the full life of the loan.

All in all, if you have a steady income that you are sure you’ll keep for the foreseeable future, this refinancing option is for you.

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