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MEFA Student Loans – The Massachusetts Educational Financing Authority (MEFA) is a nonprofit state-chartered lender that provides student loans to individuals who are from Massachusetts or got to school in the state. It allows you to bring on multiple co-borrowers to strengthen your application.
It has a competitive rate and it is one of the few lenders that charge an origination fee on its student loans. And it has little flexible repayment options than your average student loan provider.
How Can you be Eligible for a MEFA Student Loan?
To be eligible for a MEFA undergraduate student loan, you must:
1. Be enrolled at least half time in an undergraduate program. Summer students can get away with being below half time as long as they enroll full time in the fall.
2. Attend an eligible degree-granting nonprofit institution. Generally, schools that offer federal aid are eligible for MEFA undergraduate loans.
3. Have some affiliation with Massachusetts. You or a co-borrower must be a resident of Massachusetts or you need to attend college in Massachusetts.
4. Maintain satisfactory academic progress. Each school has its own standards for satisfactory academic progress, though most define it as a 2.0 GPA or a C average.
You or your co-borrower must also meet MEFA’s credit requirements:
5. Credit score of 670 or higher. This is considered a good credit score. Only one of your co-borrowers needs to meet this requirement.
6. Monthly income of at least $2,100. This monthly income requirement applies to your income before taxes.
How do MEFA Student Loans Work?
MEFA is a direct nonprofit lender that offers private student loans to help cover your undergraduate education costs when federal loans fall short. Loans start at $2,000 for private school students and $1,500 for public school students.
Unlike most other private student loan providers, MEFA encourages students to apply with up to two co-borrowers to help you meet the credit requirements and share the responsibility of paying back the loan.
You can complete the application online in a few minutes with your co-borrowers, though it can take a month or so before your school gets its funds.
How Much Do MEFA Student Loans Cost?
The main cost to be concerned about is the APR, which includes interest and fees. MEFA only offers fixed-rate loans to undergraduates, which come with a 4% origination fee if you apply with a co-borrower or 7% if you apply alone.
However, unlike most lenders, MEFA can charge a lower rate while you’re in school, and increase it after graduation or if you leave school. Also, it offers a different range of rates for different repayment plans and terms.
Know that while it’s common for student loan providers to offer a rate discount for signing up for automatic repayments, MEFA doesn’t.
What Are Your Repayment Options?
MEFA offers four different repayment plans depending on your needs. They are:
1. Immediate: Available with terms of 10 to 15 years, this plan comes with full repayments that begin on the 28th of the month after your school receives its funds.
2. Interest-only: Start making repayments on interest on the 28th of the month after your school receives its funds. Full repayments begin once you leave school or drop below half time. Only available with a 15-year term.
3. Deferred: Hold off on repayments until six months after you leave school or drop below half time, with a maximum deferment period of five years. Only available with a 15-year term.
4. Deferred with co-borrower release: This option works the same as deferred repayment, with the added benefit of applying to take your co-borrowers off your loan after making 48 on-time repayments in a row. Only available with a 10-year term.
Why Should You Consider MEFA?
MEFA student loans offer several benefits including:
1. More than one co-borrower allowed: In fact, MEFA encourages both of your parents or two other creditworthy individuals to apply with you to help strengthen your application.
2. No prepayment penalty: This means you can pay off your loan early to save on interest — and take advantage of more flexible repayment plans.
3. Co-borrower release: MEFA offers a repayment plan that allows you to take your co-borrowers off your loan without having to refinance after 48 consecutive on-time repayments.
How to Sign up for MEFA Student Loan
You can apply for a MEFA student loan online or over the phone by calling 800-266-0243. Follow these steps to begin your application online:
1. Go to the MEFA website, www.mefa.org and click “MEFA Loans” in the main navigation bar.
2. Scroll down and click “Apply Now” under the heading Undergraduate Loans.
3. Review the list of the required information before clicking Apply Online.
4. Fill in the required fields with information about you and your co-borrowers. Usually, this step takes around 10 minutes.
5. Review your application before submitting it. You should find out if you’re eligible instantly and receive directions on how to proceed with the application.
After the online application, MEFA usually asks borrowers and co-borrowers to upload relevant documents, such as recent pay stubs. At this point, it reviews your application and gives you a choice between several different offers with different repayment plans.
Pick the offer that suits your needs and signs your loan documents. MEFA will work with your school to disburse your funds by the beginning of the semester.
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