MEFA, the Massachusetts Educational Financing Authority, is a state-chartered organization that helps families pay for college through student loans, loan refinancing, and college savings programs. Established in 1982 under Massachusetts state law, MEFA is self-funded and operates as a nonprofit authority rather than a traditional private lender. Its core offerings include undergraduate and graduate student loans with no origination fees, a 529 college investment plan called the U.Fund, and a prepaid tuition program called the U.Plan.
How MEFA Student Loans Work
MEFA’s best-known product is its undergraduate loan, which covers the cost of attending college after other financial aid has been applied. These are private loans, not federal loans, so they work differently from Direct Subsidized or Unsubsidized Loans you might receive through FAFSA. The key selling point is that MEFA charges no origination fee, no application fee, and no prepayment penalty. Many private lenders charge origination fees of 1% to 5% of the loan amount, so this can represent real savings.
For the 2025-26 academic year, MEFA’s fixed interest rates on undergraduate loans range from 3.29% to 8.89%, depending on the repayment plan you choose and your creditworthiness. Borrowers who start repaying immediately get the lowest rates. A 10-year immediate repayment plan starts at 3.29%, while a 15-year immediate repayment plan starts at 4.09%. If you defer payments while in school, rates are higher, starting around 7.44% to 7.49%.
MEFA offers several repayment structures to fit different situations:
- Immediate repayment: You begin making full principal and interest payments right away, which earns you the lowest rate.
- Interest-only repayment: You pay only the interest while enrolled, then switch to full payments after graduation.
- Deferred repayment: No payments required while the student is in school, with repayment beginning after graduation.
- Deferred with co-borrower release: Similar to deferred repayment, but includes the option for a co-signer to be removed from the loan after the borrower meets certain criteria.
The U.Fund: MEFA’s 529 Savings Plan
The U.Fund is Massachusetts’ 529 college investing plan, managed by Fidelity Investments. You contribute money into the account, Fidelity invests it in the market, and the earnings grow tax-deferred. When you withdraw funds for qualified education expenses, those withdrawals are tax-free at the federal level.
Qualified expenses cover more than just tuition. You can use U.Fund money for fees, room and board, books, supplies, and equipment. The account works at any accredited college in the country, including graduate schools and vocational or career training programs, plus some international institutions. Federal law has also expanded eligible uses to include up to $10,000 per year in K-12 tuition, apprenticeship training costs, and up to $10,000 total toward repaying student loans.
Because the U.Fund is invested in the market, your balance can grow significantly over time, but it also carries investment risk. The value of your account will fluctuate with market conditions.
The U.Plan: Prepaid Tuition Program
The U.Plan takes a completely different approach from the U.Fund. Instead of investing in the stock market, the U.Plan lets you prepay tuition at today’s prices at nearly 70 participating Massachusetts colleges and universities. Your contribution buys a percentage of the current year’s tuition, and that percentage grows at the same rate tuition increases at each school. If tuition rises 4% a year, your investment effectively earns 4% a year.
The money in a U.Plan is backed by bonds carrying the full faith and credit of the Commonwealth of Massachusetts, so it’s not subject to stock market swings. This makes it a more conservative option for families who want predictability and protection against rising tuition costs.
There’s a catch, though: the U.Plan only locks in value at participating schools. If your child attends a college that isn’t part of the program, you can transfer the funds to another family member or cash out. Cashing out returns your original investment plus interest, with no penalty, but you won’t get the tuition-inflation benefit.
Who Can Use MEFA
MEFA was created by and for Massachusetts, but its reach extends beyond state borders in some cases. The savings programs are primarily designed for Massachusetts residents saving for college. The U.Plan’s participating schools are all Massachusetts institutions, though the U.Fund can be used at accredited schools nationwide.
MEFA also offers planning tools and college guidance resources on its website at no cost, including a college affordability calculator, financial aid guidance, and information about how to compare financial aid award letters. These resources are available to anyone regardless of where they live.
How MEFA Differs from Federal Loans
MEFA loans are private loans, which means they don’t come with the same protections and benefits as federal student loans. Federal loans offer income-driven repayment plans that cap your monthly payment at a percentage of your income, potential loan forgiveness programs like Public Service Loan Forgiveness, and standardized deferment and forbearance options. MEFA loans don’t include these features.
For most borrowers, it makes sense to maximize federal student loans first, since they tend to carry lower interest rates and more flexible repayment options. MEFA loans are typically used to fill the gap between what federal aid covers and the total cost of attendance. The no-fee structure and competitive rates make MEFA a strong option in the private loan market, particularly for borrowers with good credit who qualify for the lower end of the rate range.
Beyond Loans: MEFA’s Planning Resources
MEFA positions itself as more than just a lender. Its website offers free tools for families at every stage of the college planning process, from estimating future college costs to understanding financial aid offers to mapping out a savings strategy. The organization runs webinars and publishes guides aimed at helping families make informed decisions about paying for higher education, whether or not they ultimately borrow through MEFA.