Massachusetts College Students Lose Funding Source for Student Loans
For the first time in its nearly 30-year history, The Massachusetts Educational Financing Authority won’t be offering student loans this fall to
the 40,000 borrowers it serves, according to an article in The New York Times (“Agency in Massachusetts Is Stopping College Loans,” July 29, 2008).
Citing the troubled economy and fallout from the subprime mortgage crisis, MEFA dropped out of the federal student loan business in April,
but by June said it would continue to offer private student loans.
The nonprofit student-loan authority, which provided more than $500 million in college loans to Massachusetts students last year, announced
on Monday that it would no longer be feasible to offer private student loans. MEFA made the announcement following news that the authority’s
bond insurer faced a possible credit-rating downgrade that would have increased the cost of floating new debt.
”It’s really the capital markets. It’s a global situation,” said Jessica Belt, a MEFA spokeswoman. “We’re looking at other options. It’s
uncharted territory for everyone, not just MEFA.”
MEFA joins the list of 50 other nonprofit organizations, state agencies, banks, and private lenders that have dropped out of the student
lending business this year. Belt says that while it is unclear when the agency will be able to secure new funding, it hopes to rejoin the
market in time to help students with their tuition bills for the spring semester.
In the meantime, MEFA has set up a hotline to help families secure other college funding sources.
MEFA will continue to run its other educational programs, including U.Fund, a college savings plan that families can use to
pay for tuition, fees, room and board, and books at 80 Massachusetts colleges and universities.
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