Paying for College

What is a Loan Agreement?

Learn about the aspects of a loan agreement, including advances, promises to pay, default, change in contact information, limits on discharge of debt in bankruptcy, and co-borrower liability.
Man using laptop to learn about loan agreements

When applying for a private student loan, you will need to sign a loan agreement. A loan agreement is a legally binding contract between the borrower(s) and the lender that states the terms of borrowing the loan, including the amount to be repaid, the interest rate, and any other conditions.

Both the student borrower and the co-borrower (often the parent) will need to sign the loan agreement. You most likely will sign electronically. You will have to sign a loan agreement for each year that you borrow a private student loan, as the interest rate and terms may differ from year to year. Understanding the terms and conditions of your loan when signing the agreement can help you set your expectations for borrowing and ultimately repaying your student loan.

The MEFA loan agreement will cover various aspects of borrowing a student loan. The title of the loan agreement will indicate whether it is an undergraduate or graduate loan, and will also specify if the repayment type is deferred or interest-only. If no repayment type is indicated in the title, the loan has immediate repayment. Some items the loan agreement may include are:


This states that you understand you will be notified of the amount you are borrowing and the date the funds will be advanced to you. The lender may not advance any further amounts if the student borrower is no longer at least a half-time student at the institution or is not maintaining satisfactory academic progress as defined by the institution.

Promise to Pay

This states that you will repay the principal amount borrowed, plus any interest on the unpaid principal balance.


This states what the consequences of defaulting are, and that a default in payments may be reported to credit agencies.

Change in Contact Information

This states that you have an obligation to notify the lender or servicer of any change of name, telephone number, address, or email address.

Limits on Discharge of Debt in Bankruptcy

This states that student loan debt is not dischargeable in bankruptcy unless the exemption from discharge would cause the borrowers "undue hardship" as determined by the courts to the extent permitted by applicable law.

Co-Borrower Liability

This states that all borrowers are obligated to repay the amounts owed.

Why does this matter to you?

MEFA requires all borrowers on the loan to sign the MEFA Loan Agreement before we are able to disburse the funds to the school. Make sure to review the agreement carefully before you and your co-borrowers sign. If you have any questions, please reach out to us at

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