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MEFA Trying To Return To Student Loan Business

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Aug 22, 2008 9:17 pm US/Eastern

MEFA Trying To Return To Student Loan Business

BOSTON (AP) ―

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The Massachusetts Educational Financing Authority is trying to get back into the student loan business.

The agency that has provided loans to about 40,000 families in Massachusetts each year is gauging market interest in a $400 million bond sale. If there are takers, MEFA says it would be able to offer fixed-rate loans to college students.

MEFA announced last month that it could not finance private student loans because the auction-rate bond market had collapsed. In April, the authority said it could not support federal Stafford Loans.

Both sets of loans have typically been cheaper than those offered by commercial banks.

A spokeswoman for MEFA said she could not estimate the demand for the bonds Friday, now that many families have made alternate financing plans.