MEFA Refinance Review
MEFA has limited options but can be a good deal for certain borrowers.
(Editors Note: Article updated on 6/17/17 to include $200 customer bonus information)
The Massachusetts Educational Finance Authority, better known as MEFA, was created by the Massachusetts legislature over 30 years ago with the goal of providing access to higher education in the State of Massachusetts. While people without ties to Massachusetts cannot get in-school student loans from MEFA, MEFA will refinance student debt for students from across the country. The MEFA student loan refinance does come with a few major limitations, but for many borrowers it can be a great option.
MEFA Refinance Basics
MEFA offers both fixed-rate and variable-rate loans. The fixed-rate loans currently start at 4.95% and go as high as 6.95% while the variable rate loans start at 3.84% APR. All loans are on a 15 year repayment plan.
The minimum amount that can be refinanced is $10,000 and there is no maximum. MEFA requires applicants to have a 670 or greater FICO score and to be earning at least $2,000 per month. They also require borrowers to have been in repayment on their current loans for at least 12 months.
Like most other refinance companies, there are no origination fees with MEFA, nor are their any prepayment fees. MEFA does allow co-signers, but there is no co-signer release program, so any co-signer will be on the loan for the life of the loan.
MEFA also makes it very clear that they refinance student loans, but that they do not consolidate student loans. The service MEFA provides is that they will pay off existing student loans with both private lenders and the federal government. In return, the borrower repays MEFA according to the terms of the new loan that was used to pay off the other debts. Most lenders who offer this service use the term refinancing and consolidation interchangeably. The language can be a bit confusing, but the service is identical. The important difference to understand is the difference between private lenders and federal student loan consolidation. MEFA falls in the private lender category.
The biggest limitation on the MEFA refinance loans is that there is only a 15 year repayment plan. For some borrowers, this length is a sweet spot, but for many it presents an issue. If you are looking for a 5 years loan with the lowest interest rates possible, MEFA will not be a good option. Similarly, if you are looking to stretch out payments over the longest length possible, many other student loan refinancing companies offer 20 year loans. However, if a 15 year loan is what you are looking for, MEFA could be a good deal. While their lowest advertised rates do appear to be higher than most other lenders, if you compare MEFA rates to the 15 year loan rates of the competition, MEFA falls right in line with most other lenders.
Another significant limitation with MEFA is the lack of a co-signer release program. Generally speaking, we are very skeptical of co-signer release programs because lenders have no incentive to approve borrower applications, but eliminating the possibility means that if you get a great interest rate, you cosigner will have the loan show up on their credit report for the next 15 years. This is a major commitment.
If you spend some time of MEFA’s site, you will see they are one of the better lenders when it comes helping make sure borrowers make a smart decision when it comes to refinancing federal student loans. As we note in all of our student loan refinancing reviews, borrowers are giving up a lot of federal perks if they refinance their federal loans with another lender. This gives them much more credibility in our view.
Additionally, the interest rates offered for 15 year loans are quite competitive with other big name lenders. This repayment length only appeals to a certain subset of borrowers, but for those looking for a 15 year loan, MEFA can be a good option.
MEFA is not a big name lender and they have a much smaller advertising budget than companies like SoFi. They also offer a much smaller selection of available loans. However, if you happen to meet the MEFA requirements and are looking for a 15 year loan, MEFA can be a great option and should definitely be on the list of companies to apply and check your rate.
Due to the significant limitations with MEFA loans, they currently come in 10th place on our student loan consolidation and refinancing rankings. However, if we were to rank companies according to who had the best 15 year loan, MEFA would likely be several spots higher on the list.
Applying to MEFA
We suggest borrowers who are considering MEFA to apply through the Credible platform. The credible application checks rates with up to six different lenders, including MEFA, which reduces the amount of effort required to shop around. Borrowers who refinance through this route also get a $200 bonus.