The Massachusetts Educational Financing Authority (MEFA) today announced all rates and borrower benefits on its federal education loans will remain unchanged for the 2007-2008 academic year despite a recent reduction in government subsidies prompting other lenders to reduce or eliminate benefits. MEFA is guaranteeing all previously stated loan terms on Federal Stafford and PLUS loans for the remainder of the academic year and will absorb the additional cost resulting from a recent change in federal law.
“MEFA will maintain its very favorable borrower benefits because that's the promise we made to Massachusetts families, and we intend to keep it,” said Thomas Graf, Executive Director of MEFA, the state's pro-student, non-profit college loan lender. “We have an obligation to provide low-cost loans, and we are serious about that commitment.”
The College Cost Reduction and Access Act of 2007, while increasing funding for Pell Grants, also reduced subsidies to student loan lenders by $21 billion. As a result, some lenders are announcing the reduction or elimination of rate-reduction benefits on new loans disbursed after October 1, 2007. Those benefits often included reduced fees and lower interest rates for automatic debit payments and consecutive, on-time payments.
MEFA's borrower benefits on federal loans, such as the Stafford and PLUS loans, may save borrowers thousands of dollars over the life of the loan. MEFA's rate-reduction benefits can reduce the 6.80% fixed interest rate on a Stafford Loan by 2.25% and reduce the 8.50% fixed interest rate on a PLUS Loan by 1.25%. In addition, MEFA’s Stafford Loan will continue to feature no fees.
For a full listing of MEFA's borrower benefits on federal loans, visit www.mefa.org, or call MEFA at 1-800-449-MEFA (6332).
MEFA is a non-profit state authority that was established in 1982 by the Massachusetts Legislature in response to concerns about the affordability of higher education. In addition to providing education loans, MEFA offers families college savings programs through the U.Plan Prepaid Tuition Program and the U.Fund College Investing Plan. In its 25-year history, MEFA has issued more than $2.3 billion in bonds and has assisted more than 200,000 families financing a college education. Visit MEFA online at www.mefa.org.