Smart Shopping Lowers College Loan Debt, MEFA says
16 July 2024 - 10:45PM
Business Wire
Key Points:
- If you need to borrow beyond the federal Direct Subsidized and
Unsubsidized student loan, shop around and compare multiple
lenders’ interest rates, loan terms, fees, and other
conditions.
- MEFA’s loan rates for the 2024-2025 academic year are fixed at
5.75%-8.95% APR* with no application or origination fees.
By now, many families with college-bound students have
successfully completed this year’s financial aid process and are on
to the next task: finding an affordable loan to cover any remaining
college costs. How can students and parents do this? Shop around
and compare options to reduce the overall cost of borrowing, MEFA
advises.
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Borrowers should take note of each lender’s interest rates,
terms, and conditions, and be certain to consider the total cost of
borrowing across all years of enrollment. By doing so, savvy
borrowers could save thousands of dollars in interest and fees.
“For many students, college continues to be a solid investment
in their future. In addition to considering the cost of tuition
when deciding on a college, families shopping for college loans
should compare the rates, terms, and conditions to find the one
right for them, just as they would when buying a car, a new
television, and other big-ticket purchases,” said Thomas Graf,
Executive Director of MEFA.
MEFA encourages potential borrowers to first complete the FAFSA®
(Free Application for Federal Student Aid) and receive the maximum
amount available in Federal Direct Student Loans. These loans offer
favorable terms and conditions, including a guaranteed fixed
interest rate, an option to be consolidated, and multiple repayment
options.
If additional funds are needed, consider private loan options.
Before borrowing, MEFA's experts suggest shopping around and doing
your homework. How?
- Understand how interest rates work and what may impact
them. Education loan lenders offer a range of both fixed and/or
variable interest rates, though only borrowers with excellent
credit histories are awarded the lowest rates. The repayment option
selected will also impact the interest rate. For example, delaying
repayment until after graduation typically increases the interest
rate. A loan's interest rate can significantly affect the loan's
total cost. MEFA's Student Loan Payment Calculator shows how
different repayment options impact the total cost of a MEFA
Loan.
- Compare private loan details carefully. Every private
lender is required to provide an Application and Solicitation
Disclosure that details the cost of the loan, including fees. This
document should be available on a lender's website. Before
borrowing any private loan, it’s recommended to compare the
information included in these disclosures. MEFA's webinar,
Comparing College Loan Options, offers a primer on reading and
understanding them. The Undergraduate Application and Solicitation
Disclosure for the MEFA Loan details MEFA’s fixed interest rates
for the 2024-25 academic year between 5.75% and 8.95% APR*, with no
application fee, no origination fee, no late charges, and no
returned check charge. It includes examples of loan costs for
various repayment options, including 10- and 15-year loans,
immediate repayment, interest-only repayment while enrolled, and
deferred repayment. MEFA undergraduate, graduate, and refinancing
loans are available to qualifying borrowers nationwide.
- Make sure you understand what a PLUS Loan is, and how it
works. The Parent PLUS Loan is a federal loan designed to help
parents pay for education expenses that are not covered by other
financial aid. The U.S. Department of Education is the lender and
the interest rate for 2024-2025 is 9.08% with a 4.228% origination
fee.
MEFA's college planning experts are available to help students
and families navigate the education loan process via phone at (800)
449-6332 or via email at collegeplanning@mefa.org.
Visit mefa.org for all of MEFA's expert college planning
guidance including free webinars, helpful videos, the MEFA Podcast
series, and the MEFA blog with articles covering a full range of
college planning topics, including Tips for Private Student
Loans.
*The Annual Percentage Rate (APR) is designed to help consumers
understand the relative cost of a loan and reflects the loan's
interest rate, timing of payments, and fees. MEFA's lowest rates
are only available to the most creditworthy applicants.
About MEFA
MEFA is a state authority, not reliant on state or federal
appropriations, established under Massachusetts General Laws,
Chapter 15C. MEFA’s mission, since its founding in 1982, has been
to help Massachusetts students and families access and afford
higher education and reach financial goals through education
programs, tax-advantaged savings plans, low-cost loans, and expert
guidance. All of MEFA’s work aligns with the ever-present goal to
support the independence, growth, and success of Massachusetts
students and families. Visit mefa.org to learn more or follow MEFA
on Facebook, Instagram, LinkedIn, Twitter and YouTube.
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Lisa Rooney MEFA lrooney@mefa.org (617) 224-4838