Overview
The Massachusetts Educational Financing Authority (MEFA) was established by Chapter 803 of the Acts of 1982 and codified as Chapter 15C of the Massachusetts General Laws. MEFA is a self-funded, state-chartered student loan organization. MEFA provides financial assistance to students attending post-secondary schools through financing and refinancing the cost of education.
According to its website, MEFA’s mission is to help “students and their families plan, save, and pay for college and reach financial goals.” MEFA offers student loan options with fixed interest rates for both undergraduate and graduate students.
MEFA also works with parents, students, and school guidance counselors by providing various instructional opportunities through its advisory and outreach programs. Each MEFA student loan must be certified by the student’s college or university before disbursement to ensure that the loan does not exceed the college’s or university’s cost of attendance.
During the audit period, MEFA disbursed a total of 39,203 student loans, totaling $866,605,242,1 and MEFA had assets of approximately $2.8 billion as of June 30, 2024. MEFA is headquartered in downtown Boston and employed 41 individuals as of June 30, 2024.
MEFA Educational Loan Programs
According to its website, to be eligible for a MEFA loan, a student must be enrolled at least half-time in an accredited, degree-granting undergraduate or graduate program at an eligible nonprofit college or university in the United States. The student must also maintain satisfactory academic progress as defined by the college or university. Borrowers must be citizens or permanent residents of the United States with no history of (1) default on an education loan and (2) bankruptcy or foreclosure in the past 60 months. Finally, the loan application must comply with MEFA’s credit approval standards. These standards depend on the type of loan and the number of signatories on the loan. MEFA reviews applicants’ credit scores and additional data from applicants’ Experian credit reports and verifies that these scores and data meet its standards.
According to officials from MEFA, the MEFA loan process is divided into two distinct phases: the origination phase and the servicing phase. The loan process begins at the origination phase, which involves the initial application, the review and approval of the application, the review of disclosure information by the applicant, the school certification of loan eligibility, and finally, disbursement of the loan.
The following diagram, provided to us by MEFA for this audit, illustrates the loan origination process, highlighting the steps from application to the disbursement of funds.
Source: MEFA senior management
As a result of a private loan origination agreement signed on January 29, 2018 between MEFA and Entech Consulting LLC (referred to in this report as Entech), MEFA outsourced its education loan origination processing and call center operations to Entech. According to the terms of the agreement,
Entech has developed and is marketing a computerized education loan origination service using Entech’s [loan origination] software (the “Software”), as customized for individual customers, and has employed personnel for the performance of related call center functions.
Entech shall perform all services and duties customary to the origination of education loans in accordance with generally established procedures and industry standards and practices, including. . . . (1) Reviewing and responding to all electronic mail inquiries from applicants (including co-applicants) and borrowers (including co-borrowers) of MEFA’s education loans, and processing all inbound documents received by mail, electronic mail or facsimile transmission [and] (2) reviewing and processing via the Platform loan applications and related documents, as applicable, including without limitation credit agreements and applicant certifications.
The loan origination process includes a mobile application that allows customer service representatives to initiate applications through loan origination software. However, borrowers are eventually required to set up an online account to access important disclosures and view other critical documents. As part of this process, students must create an account and provide personal and financial information, including their names, Social Security numbers, income, school names, desired loan amounts, grade levels, and academic years for which they need the loan.
Once registered, student borrowers are required to review several important documents. These include the Application and Solicitation Disclosure, MEFA’s Electronic Communication and Signature Disclosure, and the Privacy Policy Disclosure. The Application and Solicitation Disclosure is designed to inform borrowers about loan options and help them compare MEFA loans with other available financing options.
Student borrowers have the option to invite a coborrower, who is often a parent, to join the application process. The student borrower sends a direct invitation to the coborrower, who then creates their own MEFA account and completes their portion of the application. Once the coborrower has set up their account, both the student borrower and the coborrower review the Application and Solicitation Disclosure and the Privacy Policy Disclosure, verify the loan amount entered by the student borrower, and provide their housing and income information.
After completing these steps, the borrower moves on to the credit consent stage, where they must authorize MEFA to evaluate their credit history. This evaluation is conducted using FICO-based2 underwriting, which is a scoring assessment using many different pieces of credit data in an individual’s credit report, and is facilitated through Experian, MEFA’s credit reporting partner.
Once the minimum credit score requirement is met, MEFA presents the available loan options to the student borrower and coborrower. After reviewing the options and selecting a loan, the student borrower and coborrower can electronically sign the loan documents to finalize the loan.
Before finalizing the loan, the borrower(s) must review the Truth in Lending Approval Disclosure and the MEFA Loan Agreement, consent to the terms, and authorize identity verification. This verification process ensures the authenticity of both the student borrower and coborrower, which is required to complete the electronic signature process securely.
Upon completion of the loan agreement, the coborrower must complete the self-certification form, which is required by the United States Department of Education. This self-certification involves submitting the estimated cost of attendance and financial aid awards.
After the loan agreement is signed, MEFA contacts the student’s school to certify the loan based on eligibility requirements and enrollment status and to verify the cost of attendance, as well as any other financial aid the student may be receiving. The school also establishes the disbursement date for the funds. Once the disbursement date is set, both the student and coborrower receive an email notification to log in to their account and review the final disclosure document. Once MEFA has determined that the 30-day grace period has concluded, the origination process is complete and the loan is transferred to the servicing phase.
MEFA contracts with the Pennsylvania Higher Education Assistance Agency (PHEAA) to provide loan servicing for borrowers. According to PHEAA’s website,
The Pennsylvania Higher Education Assistance Agency (PHEAA) was created by the Pennsylvania General Assembly in 1963 to provide affordable access to higher education for PA students and families. . . .
PHEAA conducts student loan servicing operations nationally as American Education Services (AES). . . . AES was created to guarantee and service a variety of Federal Family Education Loan Program (FFELP) and private education loan products for lending partners throughout the United States. AES is a national leader in providing quality customer service to millions of student loan borrowers through its highly trained and experienced customer service representatives.
According to MEFA’s service agreement with PHEAA, dated April 1, 2018,
Pennsylvania Higher Education Assistance Agency [doing business as] American Education Services will be responsible for servicing the Education Loans over the life of the loan or the term of the Servicing Agreement. Servicer will provide loan Servicing in accordance with the Servicing Guidelines
As part of the service process, PHEAA reviews loan documentation and ensures timely repayment of loan amounts. Borrowers have the option to begin repayment immediately or to defer payments until they have completed their educational program.
According to MEFA officials, MEFA offers modified payment plans to support borrowers experiencing financial difficulties, allowing for lower monthly payments. MEFA provides guidance and support through four distinct programs designed to help both undergraduate and graduate students manage repayment. These options include an interest-only payment program, which temporarily reduces financial stress by allowing borrowers to pay only the interest for a specified period. Modified payment terms may be offered to borrowers who experience financial hardship to help prevent default if borrowers’ accounts are 15 or more days overdue. MEFA reviews loan portfolio performance reports, including aging reports, to assess its overall inventory of loans, including those in delinquency.
During the audit period, a total of 35,217 loans, totaling $651,146,413, were approved and accepted. The table below provides a breakdown of the loan types and their corresponding total dollar amounts.
| MEFA Loan Type | Fiscal Year 2023 Amount | Fiscal Year 2024 Amount | Total Amount |
|---|---|---|---|
| Undergraduate Immediate Repay | $33,050,346 | $41,345,397 | $74,395,743 |
| Deferred Graduate Fixed Interest | 9,539,991 | 9,954,220 | 19,494,211 |
| Deferred Undergraduate Fixed Interest | 85,586,916 | 96,370,933 | 181,957,849 |
| Undergraduate Fixed Interest Only | 39,670,357 | 38,621,367 | 78,291,724 |
| Graduate Fixed Interest Only | 3,450,177 | 4,028,792 | 7,478,969 |
| Undergraduate Deferred with Coborrower Release Provision: 15-Year Term | 62,405,581 | 71,808,415 | 134,213,996 |
| Undergraduate Immediate Repay: 10-Year Term | 71,086,508 | 84,227,413 | 155,313,921 |
| Total | $304,789,876 | $346,356,537 | $651,146,413 |
Marketing of Supplemental Loan Program
According to Section 5C of Chapter 15C of the General Laws, MEFA is authorized to develop a state-supported supplemental education loan program. This program is intended to provide additional financial assistance to students through loans with favorable terms, such as lower interest rates, making it easier and more affordable for students to pay for their education. This initiative must be implemented in partnership with participating higher education institutions and is designed to help these institutions attract and retain students.
A key objective of this program is to raise public awareness so that MEFA can assist as many qualified students and higher education institutions as possible.
Outreach
According to officials, MEFA works with organizations to build strong business-to-business relationships to help market its programs. It also provides school administrators, counselors, community organizations, and college staff members with training and development programs, which are aimed at enhancing student lending practices and increasing awareness of MEFA’s services.
MEFA aims to increase awareness of the student loan process by working directly with families to develop a clear timeline for borrowers regarding student loan offerings and the overall financial aid process, ensuring that they are well-prepared to make informed financial decisions. This includes helping families understand how financial aid packages may not fully cover all educational costs, potentially creating a funding gap between attendance expenses and available funds.
To educate and engage potential student borrowers, MEFA conducts targeted advertising campaigns. These efforts include branded paid search advertisements and a variety of other communication channels, such as radio spots, billboards, and online banners on social media platforms. In addition to its marketing efforts, MEFA also conducts direct outreach to students, families, and college personnel members.
MEFA events, including webinars and participation at lender fairs, are offered both in-person and virtually. These events are designed to inform families and students about options for financing higher education. As part of its marketing strategy, MEFA uses metric tools, such as Google Analytics, to monitor website traffic. MEFA tracks call-to-action buttons on its website and analyzes the paths users take through the website to better understand their behavior and needs. This allows MEFA to more effectively guide users to the appropriate webpages or materials that they are likely seeking.
| Date published: | November 26, 2025 |
|---|