[00:00:00] Hey, good afternoon, everyone. My name is Stephanie Wells, here from MEFA. I’m gonna be your presenter today. And I have a couple of friends behind the scenes from MEFA, Meredith Clement and Shawn Morrissey, who are gonna be doing the Q&A for us. So feel free to type your questions in the Q&A if you have any, and we will answer those as we go.

And we’ll leave plenty of time at the end for questions and answers as well. So today’s presentation is about comparing loan options, comparing college loan options. We are gonna record today’s session, and you’ll get a link to the recording as well as a link to the PowerPoint slides probably tomorrow.

So feel free to type any questions in the ch- Q&A. The chat is disabled. Live transcription is available. And we will record today’s webinar. All right, so here’s what we’re gonna cover today. Talk a little about MEFA so you understand who we are and how we can help you. We have lots of great [00:01:00] tools and resources that we’ll be talking about today that are free.

We … The purpose today is to talk about loans, so we’re gonna talk about how the loan process works and how loans work in general when it comes to college financing, cover some of the basic terminology so that we’re familiar with the language surrounding the education and guidance about loans. We’ll talk about how to compare different loan options, because that’s gonna be important.

You wanna shop around for the best loan for you, as well as tips for borrowing wisely. So at MEFA, our mantra is to borrow as a last resort. We want you to take advantage of payment plans, savings, and, you know, borrow the least amount as possible, and we … That’s how we counsel families. So we’ll give you some tips about that.

And then towards the end, we will also talk in a little bit more detail about the MEFA loans we have this year. We have some great low rates and great programs for you, so I’m excited to, uh, get going.

All right, so a little bit about MEFA and who we are. We [00:02:00] are a non-profit quasi state authority here in Massachusetts, and we provide lots of great educational tools and resources to help families and students pay for college. We’ve been doing this for a- nearly 45 years, and all of our programs and our guidance, if you go on our website or if you’ve been going to any of our webinars or reading our emails, you’ll see that all of the advice is straightforward.

We do everything with transparency about our programs and services. We, we do charge an interest on the loans that we offer, but everything else we do is pretty much free of charge, all the resources, calculators, webinars, email curriculums. You can even set up one-on-one appointments with MEFA staff to help you through this process, and all of that is free of charge.

And we work with colleges all over the country. We are a state-based entity, so we work with Massachusetts colleges, Mass residents going out of state, but we also work nationally. So if you’re a Connecticut resident going to school in New [00:03:00] Hampshire, we can help you as well. So, um, we are located all over.

We can work with students and families all over the country, but we are, you know, focused here on the Commonwealth

So let’s talk a little bit about how private loans work. Let’s talk about the process first, ’cause we always get a lot of questions about this. The first thing you’ll wanna do before you even look at the loans is to decide how much you’re gonna owe based on your college bill. Now, many of you may not have gotten a bill yet, because typically bills don’t go out for the fall until June or July, but you’ll be getting that soon.

But you should be able to find out an estimated amount on the college’s website or maybe on your financial aid offer, just to figure out a general idea of how much you might owe. And then you’ll wanna figure out how you’re gonna pay for that amount. And it might not all be on loans, so we’ll talk about some of the other options out there Then once you figure out how much of that you’re gonna need to borrow, then you’ll wanna select your lender, and there’s lots of different ways to do that.[00:04:00]

Many colleges have lender lists on their website. You’re not limited to the lenders that they list. You can borrow through anyone ex- in- including MEFA. Um, but some of them may have lenders on their list that they’ve worked with in the past as a recommendation or an option. There’s many loan comparison tools out there that, uh, colleges also may refer you to with a link on their website, such as Elm Select is one that MEFA uses a lot and has a lot of schools using.

So that might be one that you run into, as well as recommendations from other trusted resources, like the college. Like maybe, um, MEFA, we can talk to you about different options. Then you’ll wanna decide who is gonna do the borrowing. So when we talk about borrowing, there’s student loan borrowing at the federal level, so the student will have their federal student loans, which we’ll talk about.

But above and beyond that, when you’re looking at borrowing, it really is more of a family endeavor where students will need co-borrowers, typically, [00:05:00] especially as an undergraduate, to pay for undergraduate education. ‘Cause typically, students right out of high school don’t have the credit or income necessarily to get approved, so they will, most of the time, need a co-borrower.

Then once you decide who you’re gonna borrow through and, and what loan you wanna take out, then you will submit your application online. We do recommend that you borrow for the full academic year. Interest is not assessed on monies until it’s sent to the college, so there’s no harm and no drawback for applying in May or June for what you’ll need for the full year.

‘Cause you’re not gonna get charged interest on your spring semester loan until that’s sent to the school in December or January. So apply for the full amount that you need. It’s easy to just reduce the loan versus having to apply for a new loan in the spring and have another cr- you know, credit inquiry on your credit report.

So definitely apply for the full amount for the year, and then you’ll submit that application right online. [00:06:00] Uh, with most lenders, including MEFA, it will be an instant credit decision, so you’ll find out usually right away. And then you can do all your loan documents, paperwork, MEFA loan agreements, all that good stuff right online.

Everything is electronic Then once you as the family and borrowers have done your part, signed your disclosures and, and loan agreements, then the colleges will get an n- usually an email announcement or notification that loans are ready to certify online. So they will go online to the platform that they’re using to certify MEFA loans- Yeah

and they will certify your loan to make sure that you’re not borrowing more than your cost of attendance minus your financial aid offer. So they will certify that loan, and they will also, they’ll certify the amount, but they’re also certifying things like making sure you’re enrolled at least half-time, for example, or maybe you’re in a degree-granting program making satisfactory academic progress for the [00:07:00] students, things like that.

The school is certifying those, those criteria, but they’re also scheduling the disbursement dates for your loans. So you may see on your, um, bill from the college, let’s say you, you know, borrow a MEFA loan, it may or may not be reflected on the bill depending on when you borrow. Um, so just know that if you don’t see your loan on your bill as a credit, it probably will show up.

And also know that, uh, most of the time colleges will give you a credit on your bill for the loan, but they’re not actually looking for us as a lender to disperse that loan until later in August for the fall or maybe even early mid-September. ‘Cause typically colleges want us to, as lenders, to send them the money after they know that all the students have arrived on campus, after add/drop and all of that, so that they don’t have to, you know, send a lot of refunds to students who might not have, um, enrolled.

So there’s a lot of reasons for that, but just know that your [00:08:00] bill might due, be due in late July, early August. But MEFA typically won’t send the funds for the fall semester until after that based on the school’s schedule. So they will tell the lender when to send the funds. Okay, so let’s talk a little bit about some loan terminology, some basic, basic things that you’ll see throughout the process.

So the lender is going to be the organization that provides your loan funds. There’s different types of lenders. First, there’s the federal government, which many of you are probably familiar with. They provide the subsidized and/or unsubsidized direct student loan that you will see on the student’s financial aid offer.

So that is the student’s responsibility, that loan. Um, there’s also income-based repayment options for students with the federal programs, and the federal government also supplies the Federal Parent PLUS Loan. Now, we will talk a little bit more about the Parent PLUS Loan later in the presentation, [00:09:00] but just know that changes are coming for that loan on July 1st, 2026.

The Department of Education, the federal Department of Education has changed this loan so that you can’t borrow the full cost of attendance like you can with other lenders, like MEFA or, you know, with Parent PLUS Loans from previous years. Going forward, there’s going to be a 20,000 a year cap on that loan.

So if you need 21,000 or even more than that, you probably wanna look at a different lender. And the total for that student is 65,000 that a parent can borrow. So even if you owe 20,000 a year for four years, you’re not gonna be able to get there with the Parent PLUS Loan. So how much you’re gonna owe really is gonna play a part in where you wanna borrow through, ’cause now the Parent PLUS Loan has caps.

Um, and they’ve also taken away some other benefits that I’ll talk about later. And when I say they, I’m talking about the federal, um, Department of Education that’s made [00:10:00] these decisions. So state-based entities like MEFA, many states have, um, a state-based lender that’s, you know, operates as a nonprofit. We provide a lot of mission-based work in the community.

We do financial aid nights, help families with understanding financial aid and filling out the FAFSA, and great products and programs and services like that. And also with organizations like MEFA, we source our loans in a different way, typically through, you know, bond, bond financing. So we often, most of the time, are offering not just a lower rate than some of the for-profit lenders, but including lower rates than the federal government in terms of the Parent PLUS Loan I mentioned we, we all provide free guidance and resources to help families.

And our interest rates are tied to your credit and the repayment option you choose. So once you’re looking at any private loans, whether it’s a state-based entity or a private company [00:11:00] like a bank, the credit criteria is gonna be based on your credit. So credit scores we’ll be looking at, as well as the different repayment options that you wanna go with.

So each one might require a different credit score. So we’ll talk a little bit about that. Now, there are also other private companies that many of you are familiar with, big banks and, and loan companies out there that you probably see, uh, all the time online and in the media, and they also may have, you know, a wide range of interest rates.

We do tend to see some of the bigger for-profit lenders have a much wider range of interest rates, so we’ll talk about how to navigate that. But also with, um, the private lenders, they- their credit criteria is also tied to credit scoring and the repayment options that you’re choosing. So just keep that in mind as you’re going forward that, you know, above and beyond that federal direct student loan, you are looking at credit-based[00:12:00]

Okay. So the interest rate is going to be the percentage of the amount borrowed that the lender’s gonna charge you for use of their money, so for borrowing their money. So it can come in two capacities. Different lenders might offer fixed and variable rates. MEFA just has the fixed interest rates. Uh, but a fixed interest rate is gonna give you a stable, predictable monthly payment for the life of the loan, which a lot of people like.

And variable interest rates will be, will vary. Obviously, it could be monthly, quarterly. Those rates are gonna adjust with market fluctuations. So in a low-rate environment, that might be, that might look like a good deal, uh, but a lot of folks do like that stability of a fixed interest rate. But it really is for you as a borrower to shop around and decide what’s gonna work best for you.

If you are looking at variable rate loans, just know that, that you wanna check and see what is the cap on that rate. How high can it go? And I’ll show you [00:13:00] some disclosure, disclosures where you can find that information about loans. And as I mentioned before, most interest rates are tied to the strength of your credit or your credit score and the repayment option that you choose So I mentioned the range of interest rates, and if we look at some of the lenders here, you know, we can see the, uh, MEFA loan, our new loans for 2026, ’27.

Those rates are gonna range from 4.95% to 8.90%. So you really do wanna look at the full range of interest rates. Don’t just look at that low teaser rate that’s in purple and green on the screen, ’cause most people aren’t gonna get those low teaser rates because you’re gonna need one of the highest credit scores to get that rate.

Those lower rates, particularly with some of the, um, other lenders that you see on the screen also may be tied to a lower, a shorter [00:14:00] repayment term, like a five or seven-year loan. So MEFA has 10 and 15-year loans. Uh, but the other lenders you can see, you know, some of the teaser rates, those might be tied to lower, um, repayment terms as well.

So you do wanna look at that range of interest rates and know that most people are falling in the middle. So you don’t even have to apply for these loans to know and get, kind of get a sense of what is the average rate. It’s gonna be right in the middle there somewhere. Um, so you can see with some of the other lenders here, the range is much larger.

So if you’re in the middle of any of those ranges, you’re probably looking at close to double-digit interest rates as the average or the middle, middle ground. ‘Cause most folks do have… The average credit score nationwide is around 720, average FICO. So just kinda, you know, keep in mind where you might fall.

You’ll find out when you apply what your rate will be, and there is soft credit pull features available with different [00:15:00] lenders to get an estimate without a hard credit pull of what your rate will be. But just look at these rates. You know, those, the, um, low credit score for MEFA, uh, the lowest credit score, the highest rate is gonna give you, you know, in the 8, 9, 8, 8.9% range or a little bit lower.

Whereas if you have that same credit score with other lenders, you’re looking at much higher rates, closer to 17%. So you can see here where MEFA, the programs are very competitive because we do operate like a nonprofit, um, and we, we do fund our programs differently, and we have a different mission. So shorter loan terms naturally are gonna come with lower interest rates as well.

So the quicker you are able to pay off that loan, if you wanna do immediate repayment versus deferred, that’s gonna help you get a lower rate as well. So we’ll talk about that. So the annual percentage rate is expressed as a percentage just like the interest rate, [00:16:00] but that’s gonna determine the overall cost of the loan, which is gonna include any fees if the lender has any fees.

So it’s a good way to compare loans quickly, to compare apples to oranges, maybe comparing a fixed rate to a variable rate by looking at the APR. It can really help you, um, just to have a, a quick, easy number to look at to do a quick comparison. Now, the repayment term is the length of time that you have to pay off the loan.

That is the maximum term. Now, with most lenders, especially education lenders like MEFA, you can pay the loan off at any time without prepayment penalties. So you could choose a 15-year loan to get a lower payment and then make larger payments to pay it off sooner. You could defer the loan, make voluntary payments.

You can do all… There’s all sorts of strategies, um, when it comes to the repayment term. But it does have a direct co- cost on the loan, so the further you push out that repayment with d- deferment or longer repayment terms, [00:17:00] the total cost is gonna increase. But the nice thing about different repayment term options is it provides you fa- as families flexibility based on your monthly budget, and that’s gonna differ from person to person, family to family.

So most lenders do offer multiple different repayment terms and options to choose from. So I’ll show you a little bit more about, uh, those in a second Now, application solicitation disclosures are required by the federal government of private lenders. Not the federal loan like the Federal PLUS Loan, but private lenders do have to re- report and provide you as a prospective borrower an application solicitation disclosure, which is a two-page form that provides all the fine print and detail about the loan.

It’s gonna include an estimated total loan cost for a $10,000 loan at the lender’s highest rate per repayment option. I’ll show you an example in a second. And as I mentioned, all [00:18:00] private lenders, including MEFA, have to have this on their website. So you can see here’s- MEFA’s, um, application solicitation disclosure.

It looks like that’s from the previous term here, so let’s go look at the other lender websites as well. We’ll show you some comparison tools here, and those can be found on an ELMSelect. Um, typically, colleges that are using comparison tools, they will show you, you know, how to access these application solicitation disclosures.

But it’s gonna show you what the rates are, if there’s any fees, not just origination fees, but are there late payment fee- fees? You know, if you have a variable rate, what is the cap on that variable rate? All the stuff that maybe most lenders might not be advertising and, you know, on their brochures and on their websites, you know, in big, bold print.

These disclosures are gonna give you all of that fine print, which really is important to look at. Now, the [00:19:00] co-borrower is going to be someone in addition to the student who signs the loan agreement. They have equal responsibility for the loan. Anybody who signs a loan agreement, whether you’re the first co-borrower, second co-borrower, or student, everybody has equal responsibility at the end of the day to make sure those payments are made and paid and made on time.

Now, typically, I mention undergrad students typically aren’t gonna be able to get approved on their own without a co-signer because they haven’t established credit. So adding a parent or family friend or grandparent, doesn’t have to be a parent, typically can help increase not only chances of approval, but if they have good credit, it could also lower that interest rate, which is really nice.

Now, we have talked to families before where maybe parents have had some credit issues, and they’ve applied for the loan with a grandparent who has good credit to get that loan approved and to get a good rate. So those are different strategies you can think about. [00:20:00] As I mentioned, the higher your credit score, the lower your interest rate, and that’s gonna be true with most lenders.

Uh, and some lenders, including MEFA, also have co-borrower release options, where after a certain amount of on-time payments, the students, when they get out of school and they’re working and have established credit, can apply to have the co-signer released. So that is something that could be available as well.

Um, there are other ways to get co-signers off the loan. You can also have the student refinance the loan later on, maybe even lock in a lower rate, you know, five, 10, seven years from now, depending on when they wanna refinance. So there’s other options there as well All right, so I’m gonna talk about how to compare those loans, look at some of those disclosures.

I’ll stop real quick and ask Meredith and Shawn if there’s any, uh, great questions that we wanna cover now, or if I should just keep going

Speaker 2: I think you could keep going. [00:21:00] We’re good. We’ve gotten some great questions, but yeah, I think you could continue, Steph.

Speaker: Okay. Thank you All right, so I told you about those disclosure statements. And you can see here, I took snippets of the two-page form from the MEFA undergraduate loan disclosure, which is our, you know, our current rates, which are gonna be 4.95 to 8.90.

So you can see part of the disclosure, it’s a $10,000 loan and it shows you for each of our five repayment options at our highest rate for each repayment option, what’s the loan term and what is the total cost for the life of that loan. And then Lender B, which is a different lender, which has a much larger range of interest rates and higher interest rates, they also have…

You can see their disclosure here. So if we look at two comparable loans, two immediate repayment loans or with a 15-year term, you can see the MEFA loan, the total cost if you made minimum payments [00:22:00] for the full 15 years is gonna be a, um, close to 18,000, so 17,775. If you look at Lender B, because their rates are so much higher, that $10,000 loan is gonna cost you over $30,000 with Lender B, ’cause their range of rates is much higher.

Now, if we look at a deferred option, which is what a lot of families do like to look at, ’cause they like to defer those payments while the student is in school, again, you can make the… You can bring these total costs down by making prepayments, paying off earlier. So this is sort of the worst-case scenario.

That $10,000 loan with a MEFA deferred loan is gonna be a little over 21,000. And then if you look at Lender B, because of that wide range of interest rates, you’re looking at over 56,000 for a $10,000 loan with that lender. So these are the things that you wanna look at when you’re shopping and understanding your credit.

Now if we look at the difference, and again, this is just choosing one lender over another with [00:23:00] that, you know, worst-case scenario at the highest, uh, interest rate, you’re saving over 12,500 with MEFA and over 34,500 with MEFA on that $10,000 loan. That’s a lot of money. That’s a semester’s worth of tuition at many colleges.

So think about, uh, what you’re looking at when you’re comparing loan options. Now let’s look at some other things that are on these disclosures. So- This disclosure is a fixed rate example of a different lender, not MEFA. You can look at these rates and know that they’re not a MEFA loan. And you can see it’s gonna show you the range of interest rates, so 3.2 to 18.55, but it also shows you what their fees are.

So on this lender’s website it probably will advertise no origination fees, but you can see they do have late fees and returned check fees of 20, up to $20 and 5% up to $25 for a late fee. So there are some fees [00:24:00] tied to this loan. And then you can also see, I showed you on the previous slide, it shows that total cost of the loan for the different repayment options that this lender charges.

Now, when you apply for a loan and you actually submit your application, you’ll get a new disclosure like these, but it will be very specific tied to your credit score, the repayment option you chose, and your exact interest rate. So it’ll be much more, um, accurate based on your loan. But these disclosures are just to help you with shopping and comparing loan options.

All right, so let’s look at a variable rate disclosure example. Again, I just took snippets of the disclosure, and you can see on the first page it’s gonna show you the range of interest rates, so that’s gonna be on there. But then you’ll also see it shows you here, because it’s a variable rate loan, what the cap is on the loan.

So it will never exceed 36%. Let’s hope it doesn’t get that high. [00:25:00] Um, but at least you know how high it can go. And on the back of that disclosure is also gonna show you what the variable rate is tied to. So it could be tied to Prime or LIBOR. In this case, the variable rate is tied to the 30-day average of the Secured Overnight Financing Rate.

It’s rounded up to the nearest one-eighth, 1%, plus a margin of .15 or 13 to 13.89% is gonna be added to that. So you can see how they come up with their variable rate. Those fine details are on the disclosure All right, so we talked a little bit about how loans work, how to compare options, how to shop a little bit for different loan options.

Now let’s talk about, uh, strategies to make the numbers work. Some tips that we’ve learned along the way that we provide to families. So first, beware of the timing. Timing is important. You wanna make sure your bills are paid on time, that you’re not [00:26:00] late for your fall or spring semester bills. Um, your fall semester bill will be coming sometime in June or July, and then in November timeframe, usually after Thanksgiving, you’ll get your spring semester bill.

So the spring semester bills will come, uh, later in the semester. Now, each bill, whether it’s a fall or spring, is gonna include direct costs only. So tuition and fees, and then if the student’s living on campus, it’s also going to include dorm costs, meal plans, and any other direct costs to the school. So fees, things like that.

Private scholarships and financial aid are typically gonna be deducted from your bill. If you set up a payment plan or if you applied for your loan early, you may also see these amounts credited toward your bill. The work study allotment, if the student got work study, is typically not deducted from a bill.

Even though it is financial aid, [00:27:00] it’s money that the student still has to earn and work towards in a part-time job and get a biweekly paycheck. So it is money they can earn, but it’s usually to pay for unbilled expenses. So it’s not gonna be credited towards the bill at most schools. We do recommend give yourself a cushion of at least two weeks before the bill is due to apply for the loan.

You can apply for the loans now if you want to, if you have a really good idea what your annual cost will be for that loan. Uh, but just give yourself a two-week cushion. You never know what might be on a credit report with credit theft, and sometimes folks freeze their credit and might forget to lift the freeze before they apply.

Things like that happen. So give yourself a little cushion. Even though it is a really quick instant credit process, you can be applied and done with your step within, you know, a half hour with the MEFA loans. So it doesn’t take a long time, but give yourself a cushion anyway. And then if you decide, “Well, you know, [00:28:00] I don’t really need any money for the fall.

We have some savings. We think we’ll be able to get by,” and you decide for the spring, you know, maybe, maybe we do need to borrow, you can apply any time during the academic year. You do wanna set up your payment plan according to the school’s schedule. So if it starts in May or June, you know, get that set up soon so that you can start getting on their payment plan and start making payments towards your bill.

Now, one of the things I like to talk to families about is combination strategies. There’s not usually a one-size-fits-all in how families pay the bill, and it really is for you as a family to figure out what’s gonna work best for you, and it starts with knowing what your affordable monthly payment is.

Figuring out how much you owe. In this case, the example is they owe $20,000, this family. If they wanted to put it all on a loan, it would be, if you’re rounding up to using average, just general numbers, about $100 [00:29:00] per $10,000 borrowed, then that payment would be about 200 bucks for a $20,000 loan. Now, if you’re saying, “Well, I can afford to pay more than $200 a month,” then don’t borrow the full 20,000.

Let’s look at ways to shave off that loan, borrow less, save some money over the long term. In this example, we want you to look at savings first. Have you saved? Do you have a 529 plan? Even if it’s a small amount, a little bit, every little bit helps. Dig up those old savings bonds. Um, is there parent, grandparents or aunts or uncles, godparents that might also have a savings plan put aside for the student to help with college?

Figure out where the money is and how much you wanna use each year, uh, and how you wanna allocate those savings. So in this example, the student has worked over the summer. They’ve saved a little bit. They’re gonna put in 1,000 towards the bill. Parents, in this example, let’s pretend they saved about $16,000 and [00:30:00] they’ve said, “You know, we’re gonna put 4,000 a year over four years.

We’ll spread it out.” And there you have $5,000 towards that bill just in savings. Then the pa- family says, “Okay. Well, we can afford, you know, $600 a month.” Can’t… We don’t… We can’t, you know, put it all on a payment plan over 10 months at 2,000 a month for the 20,000, but we can put some on the payment plan. So they’re gonna put $500 a month on that 10-month payment plan, so they’re paying off that 5,000 interest-free over 10 months during the academic year.

And that’s shaving our bill in half, going from 20,000 to 10. They still have to borrow a little bit. They’re still borrowing $10,000 on a college loan, maybe a MEFA loan, but at least it’s not 20,000. They’re saving a boatload in interest and the amount borrowed by, you know, just looking at other ways to chip away at that bill Now, in addition, you’ll want to make [00:31:00] sure that if the student received a federal direct student loan, that they take that loan first.

Take the full amount that they might need. If you’re borrowing, if you’re looking at MEFA loans, PLUS loans, or any other type of family loans, make sure the student is maximizing the full amount of this loan first because it does typically tend to have lower rates, um, different benefits with repayment for the students.

It allows them to defer the loan while they’re in school. If they go into graduate school, they can defer. For the military, Peace Corps. Federal direct student loans do have a lot more, um, borrower protections in, in there. So it is a little bit, you know, more flexible loan, and it really is the only way that a student who might be 18, right out of high school with no established credit can…

They can’t go to a bank or lender and say, “I need to borrow about $27,000 and I can’t pay you back for four years. I don’t have any credit and I’m on- only working a couple [00:32:00] days a week.” No lender is gonna lend to that student because it’s just not, you know, a good credit risk. So they’re gonna say, “You need a cosigner.”

With this loan, what’s great is they don’t need a cosigner. The student can be the primary borrower. They can be self-sufficient here, kinda have a little skin in the game when it comes to borrowing and helping the family paying that bill. There’s no credit checks on this loan, which obviously is gonna be unheard of in a private loan.

And the way interest accrues on this loan could happen in a couple different ways. Some families might receive a portion of this loan that’s subsidized, meaning interest won’t accrue on that portion of the loan until the student gets out of school. The rest of the loan, or for some families who don’t qualify for the subsidy based on their financial need, the rest of the loan or the full loan might be unsubsidized, meaning interest will start accruing when the loan is dispersed.

So if we look at the freshman year loan as an [00:33:00] example, the full amount a freshman can borrow is $5,500. Up to $3,500 of that loan could be subsidized if you qualified from filling out that FAFSA, if your family has that financial need. The rest of the loan, $2,000 or even the full $5,500, would be unsubsidized Now, with federal loans, there is a fee attached to these loans.

You don’t see a lot of origination fees on private loans, but you do see origination fees on the federal loans. So with this Federal Direct Student Loan, 1.057% is deducted from the loan. So just know that the full 5,500 freshman year loan is not gonna be credited towards the bill. The amount that will be credited towards the bill is $5,441.87.

So if you wanna get it right to the penny, just make sure you, you know that that fee is deducted from the loan. The- once the student, uh, is enrolled and they’ve deposited at the school, which, you know, everybody should have done, you know, May [00:34:00] 1st by now for freshmen in- incoming students, the student will then get an email from the cool- school they’re attending to sign their master promissory note and go through entrance counseling at studentaid.gov, which is basically sort of like a online quiz, so to speak, to make sure that the student understands their rights and responsibilities as a federal student loan borrower.

When they graduate, they’ll also have to go through exit counseling so that they understand the repayment options as a federal student loan borrower. These are federal requirements of this loan. Now, I mentioned there’s no payments due while they’re in school, and they do have, you know, multiple repayment options for students to choose from when they graduate.

The typical standard term is gonna be immediate repayment when they get out of school over 10 years, but there are ways to do different repayment options and, and lower that payment if they need to Okay, so carefully determining the loan amount is really important to help keep that cost [00:35:00] down. So the maximum loan amount that you can borrow is gonna be the school’s cost of attendance minus your financial aid.

So only borrow what you need. Now, that cost of attendance isn’t just the billed costs. So the cost of attendance is gonna include unbilled costs like transportation, books, supplies. They’re gonna give you allotment for that. Unbilled costs could be the student living off campus. If they have an apartment with friends, they’re, you know, they might need money for food and utilities.

That’s also part of the cost of attendance if they live on ca- off campus. So you wanna think about, you know, what you’re gonna borrow and what you might need, and estimate what your loan payment will be at that loan amount. Just know what you’re getting yourself into. Now, it’s typically gonna be an annual process where you reapply each year for what you need.

You have to reapply for financial aid each year. Uh, but you do want to, with that first-year loan, estimate, “Hey, if my payment’s gonna be $200 this year, what’s it gonna be if I [00:36:00] borrow this amount for four years?” Just multiply it by four to give yourself an estimate. That’ll be $800 when the student graduates if they borrow at $200 a month for four years.

So just know, you know, before your student enrolls, what you’re gonna end up paying over the long term, not just that first year. As I mentioned, borrow for the full year. It’s easier to reduce the loan. Call the lender, call the financial aid office to say, “Hey, you know, I know I borrowed 20,000, but I really only need 18.”

Uh, no interest is assessed until monies are sent to the school, and the school is gonna allocate the loan 50/50 for fall and spring semester. And the loan funds are gonna go directly to the college. So just know that all the lenders are sending money directly to the college. If you do borrow for unbilled expenses like books or off-campus housing, we’ll send the money to the college.

They’ll apply that loan to the billed cost, and then [00:37:00] provide a refund to the family for the unbilled expenses if you need the loan for unbilled expenses. If you do borrow more than what you think you might need and it gets dispersed to the school, just call the school and say, you know, “Send a refund to the lender, and we’ll reverse interest on that refund.”

So there are ways to get the loan reduced even after the funds are, are dispersed All right, so that talks to you a lot about the process. Now let’s dig in a little bit deeper about the MEFA loans, how it compares, a little bit more about those, um, details. And I have some PLUS loan information here for you as well that we can talk about.

So for ’26, ’27, we just announced our rates this past Monday. Our rates are gonna be 4.95% to 8.90% for the academic year. Uh, you’re going to have, you know, set payments because it’s gonna be a fixed, [00:38:00] fixed interest rates. We do have multiple repayment options to choose from. I’m gonna show you our loan calculator in a second, which is a great tool to help estimate and do some shopping and planning.

But we have immediate repayment loans, interest-only, and deferred loans. There’s no fees, no origination fees, no application fees, and in fact, if you look on MEFA’s application disclosure, there’s no late fees or anything like that as well. Now, I mentioned before there’s an instant credit decision. You can just apply right online.

It doesn’t take long to fill out the application. It’s short, um, and you can have that done really quickly. And here’s a QR code if you wanna get right to the application. Okay, so here’s one of my favorite tools to use with families. The QR code is here to get right to our loan payment calculator or go right online.

We’ll play with this for a second here. Um, just know that when you get the slides, you’ll get all of these slides with the QR codes, so don’t feel like you have to write down [00:39:00] the websites. Mefa.org will get you to everything you need Now let’s see here. So I’m gonna go with $20,000 as the amount that this family wants to borrow.

I’m just gonna demo it for you real quick. Student’s a freshman, so I’m gonna use four years as before graduation. And then here you just choose, you know, what, what your credit profile might look like. There’s a little bit of guidance here about learning more about credit, so you can look at that. So there’s lots of blogs and great resources here for you.

But let’s look, if I just use the middle range, or I’ll just use… I’ll look at exceptional. We’ll get those lowest rates on here so you can see what those are. So with this calculator, what’s nice is that you can just run the numbers to look at the monthly payments for each repayment option that we offer.

It’ll show you what the in-school repayment is, what the post-school payment is, so for deferred loans, for example, or interest only. The payments are gonna be different when they’re in school versus [00:40:00] graduating. Immediate repayment, the payments will stay the same from the first payment to the last. What I love about this is it shows you the total cost, which is, you know, the maximum that you’ll pay, and it’s important to look at that.

Don’t just say, “Okay, I’m borrowing 20,000.” When you add all that interest, it does, it does add up. And it shows you what the interest rate will be, or an estimate based on your credit profile. Now, what I like about this, if we look at that immediate repayment loan, it’s gonna be about a little over, you know, almost 26,000 and a payment of about $214 a month.

If we use our previous example where we added some savings and added some payment plan and we got our debt loan down to $10,000, we can just easily, quickly recalculate, and obviously our loan is cut in half, but our payments are also cut in half. And that total cost of the loan is, is well below. So it’s nice just to see, even if you save up $3,000, just to see how much you can save.[00:41:00]

So we recommend, you know, using this tool. We can help you. Um, we have one-on-one appointments. I’ll show you the QR codes to set those up, where we can run these numbers with you and help you out with this, with this calculation as well Okay, so we get this question all the time. How… What’s the difference between the MEFA and the Federal Parent PLUS Loan?

So here are some of the k- key differences. The biggest difference, which I think is the most important, is that it’s a lower interest rate with the MEFA loan. You can see the rates right here. They go as high as 8.9%. The Federal PLUS Loan is 9.07% for this coming year. There’s no fees on the MEFA loan, where there is a 4.228% origination fee on that PLUS loan.

Now, with a $20,000 loan, th- that isn’t a small number. It’s not just a couple bucks. So you’ll wanna keep that in mind. That’s gonna be deducted from your loan as well. The student [00:42:00] is on the MEFA loan. They’re one of the borrowers. The student is not on the direct PLUS loan. It has to be a parent who is on that loan.

It can’t even be, you know, a grandparent. It has to be a parent Now, the responsibility for the loan on the MEFA loan is gonna be the student and any co-borrowers. As I mentioned earlier, the maximum amount on the MEFA loan, it’s basically whatever you need, cost minus financial aid. Now, I mentioned earlier that the PLUS loan is now gonna have caps, so you can’t just borrow cost minus aid anymore with the PLUS loan.

You’re maxed out at 20,000 a year or a to- in- with a total aggregate limit of 65,000 per student. So if you’re looking at, you know, more than 65,000 total, this is… the PLUS loan’s not gonna be a good option for you. You’ll wanna look at other options. Now, you can’t transfer responsibility of the PLUS loan.

The student can’t refinance it or take it over, whereas [00:43:00] you can with the MEFA loan. Student is on the loan. They can access the application, access the app to make the payments, all of that good stuff. Uh, they’re equally responsible here. There are credit criteria. With the MEFA loan, the cr- minimum credit score is 670 with the immediate repayment, 690 for interest only, 710 for deferred.

The Direct PLUS loan does have lower, more minimal credit standards, um, where you’re just not, can’t have derogatory credit. So it might be a little bit easier to get for families who might have had some credit issues and can’t get a credit-worthy co-signer. Repayment terms on the MEFA loan will go from anywhere from 10 to 15 years, depending on which repayment option you choose.

And Direct PLUS loans are gonna start at the standard 10 year, but there are ways to increase that as well later on. Now, with both loans, the student does need to be enrolled at least half-time. Um, with MEFA, [00:44:00] they do have to be in a degree-granting program as well and meeting satisfactory academic progress.

There are consumer safeguards. If, God forbid, something should happen to the student, death or permanent disability, the loan would be forgiven. Same with the PLUS loan. The parent is the only borrower on that loan. If, God forbid, something should happen to them, death or permanent disability, that loan would be forgiven.

Now, you do not need to file the FAFSA to apply for a MEFA loan. However, you do need to file the FAFSA with a PLUS loan, and we at MEFA recommend get that FAFSA in no matter what loan you’re looking at applying for. See what you’re eligible for in federal aid and state aid, aid from the college. Get that FAFSA in.

We always recommend apply. See what you’re eligible for. The student can’t get that Direct Student Loan unless they file the FAFSA, so it’s always a good thing to file that FAFSA

Okay, now if we look at the cost [00:45:00] comparison, I showed you the disclosures to compare MEFA to some of the other lenders out there who, you know, I didn’t name the lenders, but here we’ll talk about the PLUS Loan. We have it right here. You can see the different fees, the different monthly payments, and the total cost, which is really the most important number that I like to look at.

If we look at the comparison with the PLUS Loan and the MEFA, and with the MEFA we’re using 6.6 as the rate here because it’s the five-year weighted average of our 10-year loan. So we, we didn’t wanna just put our lowest interest rate here. We wanted to, you know, give a really n- good average. So if you look at the differences, you’re saving over $4400 with the MEFA loan.

So that’s, again, that’s not a small amount. Every little bit counts, and that’s just for one year. So think about the cost and how much you owe and what might be the best option for you In addition to the caps that I mentioned on July [00:46:00] 1st with the Federal PLUS Loan, there are a few other benefits that are being, um, taken away unfortunately on this program.

So for the interim exception, if, if p- f- families who borrowed previous limits for the remainder of the program of three years, whichever is shorter, if the student is continuing the same program at the same school and the student borrowed a direct loan or the parent borrowed a PLUS loan prior to July 1st, they will have an exception to these limits.

For parents borrowing a new PLUS loan after July 1st, the only repayment option that will be a- available to them is the new tiered standard plan, so they’re not gonna have as many repayment options as, you know, current PLUS borrowers do. And there aren’t gonna be any options for public service loan forgiveness on new loans borrowed after July 1st for parents who borrow a [00:47:00] new loan.

Um, so you wanna think about that, you know, what… If you are looking at the PLUS loan, and you can give us a call, we can walk you through these changes before you actually apply to see, you know, what, what should be your strategy based on what’s gonna work for you. Um, but there are some restrictions now on the PLUS loan in addition in the amounts, but also the repayment options and taking away the PL- the PSLF, Public Service Loan Forgiveness.

So a few other benefits on that loan have been taken away as well as of July 1st, so we just wanna let you know what’s going there with, on there with the PLUS loan in addition to the loan amounts and caps. So MEFA has a lot of free resources for you. I, I talked a lot about a lot of stuff today, but if you wanna meet with us virtual one-on-one, we can do a Zoom appointment.

You can share your bill. We can get online and share a screen, use that calculator, help you figure out a strategy to pay your bill. We have a great [00:48:00] podcast. If you like listening to podcasts, we al- always have interesting guests on our podcast, so, you know, give, give a listen and subscribe to our podcast.

And also, we have a lot of tools and resources. I showed you our payment calculator, but we have a lot of other blogs, calculators, webinars, videos that you can watch, um, on our website that you can access. So use these QR codes. You’ll get an email with these slides probably tomorrow. And just to wrap up, and then we’ll open it for question and answer, we also have all the social media channels here for you.

We have our videos on YouTube. You can like us, friend us, connect with us. We’re always sharing great articles of events we’re havi- having, webinars like this one, uh, scholarship alerts, things like that. So connect with us in any way that, you know, works for you based on what social media channels that you are using.

Okay. So lastly, I want to thank everybody for coming. [00:49:00] I know it’s getting close probably to the end of your lunch hour. But call us. We’re open 9:00 to 5:00, Monday through Friday. Our 800 number is here, or email us at College Planning if you want help. We have lots of folks like myself and Shawn and Meredith who can help you, uh, understand the process and figure out a good strategy to pay your bill, not just for the first year, but, you know, really a four-year plan.

So get in touch with us. We’re here for you. Uh, and thank you all for coming. For those of you who might have to drop off, thank you. Uh, you’ll get this recording. And then I will open it up now for questions and see if Shawn and Meredith have any that they want me to cover, um, for the group

I do see one, I’ll just cover it, um, that says, “Is this for South Carolina schools as well even though they’re, they’re Mass, they’re Mass residents?” And the answer to that is yes. You don’t have to be a Mass resident and you don’t have to be attending a Massachusetts [00:50:00] college to use the MEFA loan. We are a state-based entity, but we do lend nationally.

So even if you are a South Carolina resident going to school in South Carolina, you could use our loan. But yes, absolutely, Mass residents, you can use this loan anywhere. So feel free to, uh, you know, get in touch with us. All

Speaker 3: right. That’s great. Thanks, Steph. I don’t think there’s any more questions, Shawn.

I don’t know if you had anything that you wanted Steph to answer live, but yeah, great questions today. Um, but we might be good. Let’s see. There’s one, Stephanie, that just popped up. I don’t know if you wanna read that one.

Speaker: Oh, yeah, here’s that one. That’s a good one. I’ll a- I’ll answer that one. So this one, um, parent says they have two, two, two boys, one entering their second year, the other entering their first year.

So two in college, and they plan on applying for loans for both, co-signing for both. And there’s… Is there any issues with that? There’s no issues with that. It would be separate applications of course, because most likely they’re at separate schools. But even if they were at the same [00:51:00] school, it would be an individual application for each student, ’cause they’re gonna be the student borrower on each of those loans.

So yes, you can absolutely set up an individual loan for each student. You can also, if you’re doing payment plans, you would set up a separate payment plan for each student as well Okay, so question here, um, you know, is it better to wait to do the Parent PLUS Loan or do it now with the new changes coming?

It really is… You, you know, we’d probably wanna talk to you about how much you’re looking to borrow and whether, you know, what your credit is looking like, and whether that’s even the best option for you, because it is a more expensive loan on that PLUS Loan. So it really depends on whether you’ve already borrowed.

So it really, you know, it depends on, um, your situation. So if you wanna get in touch with us about that. Shawn, I don’t know if you have anything extra that you wanna add to that, to that answer.

Speaker 4: Yeah, the only thing I want- Whether they should wait … the only thing I wanna add is it doesn’t matter [00:52:00] whether you apply now or wait, it depends on when the loan is dispersed.

So if it’s being dispersed after July 1st, which is when most bills are due for the fall, it’s going to be under the new guidelines, whether you apply now or wait until after July 1st to apply.

Speaker: Right. And correct me if I’m wrong, Shawn, but colleges won’t have PLUS Loans dispersed for ’26, ’27 until after July 1st anyway, for

Speaker 4: the most part, correct?

Yes. If, if classes don’t start, it… Only if the classes happen to start-

Speaker: For the fall

Speaker 4: semester … before July 1st-

Speaker: Yeah …

Speaker 4: then, then they would be dispersed earlier. But if you’re starting for the fall semester, they won’t be dispersed until usually much later than July 1st.

Speaker: Great, thank you. Okay, here’s another good question.

If, if you have a student going off campus, should we include the monthly rent in the loan, or is the loan strictly for tuition and on-campus residency? And that’s a great question. You can absolutely use a MEFA loan, PLUS Loan, or any [00:53:00] of the private loans that are out there for off-campus housing as well.

So the way that would work is usually what happens is you can get in touch with the financial aid office. Typically, colleges will have an off-campus budget that they allocate for students living off campus. So that’s gonna include a budget for rent, utilities, food, things like that. Um, so typically they’ll have a budget for that, and you can use the loan for that budget.

And what will happen is the monies will be sent to the college, so you’ll apply for the full amount, including the off-campus expenses. We send the disbursement to the college, they apply that loan to the billed expenses such as tuition and fees, and you might even want a smaller meal plan, even if the student’s living off campus.

Then whatever’s left over, they’ll send the monies to you, typically the parent, and you’ll use that for rent. Now, just know that [00:54:00] They probably won’t send you that refund till September. So if you have rent due September 1st, you might have to get reimbursed for that first month of rent. Um, but yeah, absolutely you can use the loan for off-campus housing and off-campus expenses.

Just talk to the financial aid office or go on their website. They usually have a budget for that. And if your budget is much higher, you can talk to the financial aid office, ’cause they will need to certify the loan for the off-campus expenses as well. Great question. Okay. I don’t see any other questions coming in.

Thank you, Shawn and Meredith. I see that you guys answered a lot of questions. We had a lot of good feedback. Uh, but you’ll get this recording, folks, and our number and email is here if you end up having other questions beyond today. But I wanna thank everybody for coming today, and we hopefully will see you soon at the next webinar.

Give us a call or email us. Have a great day. Thank you