The Massachusetts Educational Financing Authority (MEFA) will make $300 million in fixed-interest loans available to families with undergraduate and graduate students residing in or attending school in Massachusetts, Governor Deval L. Patrick ’78 announced on Wednesday.
MEFA, a non-profit, self-financed state authority, will provide loans for the 2009-2010 academic year for undergraduate students at a fixed 7.75 percent interest rate. The graduate student loans interest rate is higher at 8.89 percent.
According to MEFA spokeswoman Jessica L. Belt, the authority was unable to provide student loans last year because it could not raise enough money until September of 2008, when it was too late for the 2008-2009 academic year.
Belt said that while MEFA had previously provided other funding resources in addition to parent loans, current economic conditions forced the authority to focus only on sustaining its traditional loans program.
“With everything that’s happened in the capital market, we’re now just working on funding our fixed interest loans,” she said.
The loans are not widely used by Harvard undergraduates, in part because of the relatively large financial aid packages provided by the University, according to Harvard Director of Financial Aid Sally C. Donahue, who estimates that 30 undergraduate families took out loans through MEFA the last time they were offered.
According to Belt, applications for MEFA loans from students attending Mass. schools have increased significantly over the past five years.
“It’s great news,” Donahue said. “We’ve had parents borrowing from [MEFA] for many years, and obviously it’s been a difficult year for loans nationwide.”
She added that since Harvard does not incorporate student and parent loans into its overall financial aid packages, the University does not take a cut of the loans.
“We are so fortunate to have the program we do, where parents don’t have to borrow as much as they did in the past,” Donahue said.
MEFA undergraduate loans had a fixed interest rate of 6.39 percent for the 2007-2008 academic year.
—Staff writer Shan Wang can be reached at email@example.com.