MEFA

I attended law school from 2007 to 2010. For two of those three years I obtained student loans from the federal government. However, based on bad advice from my law school and pressure from my parents, I reluctantly used MEFA loans to finance one year of my law school education because it was offering an interest rate that was a quarter of a percent lower than the fed. What a mistake that was, because the amount of money it has cost me on the repayment end has dramatically outweighed what I would have owed with that little bit of additional interest.
First of all, the federal government has income based repayment plans that ensure that you never have to pay more than a specified percentage of your income in any given month, and if you don’t have any income in a given month you don’t have to pay anything because your percentage comes out to $ 0. On top of that, the federal government also allows individuals to take up to three years worth of forbearance if you can’t make payments for any particular reason other than lack of income. MEFA offers none of these features. Furthermore, because I have MEFA, I now pay 15% of my income to the federal government AND have to pay MEFA several hundred dollars a month on top of that. Whereas if I had stuck with the federal government for all three years it would just be 15% of my income, period. And the federal government just came out with a new plan that would only have me paying 10% of my income, which I’ve applied for and am waiting to hear back on.
None of these important differences were meaningfully disclosed to me by either my law school or by MEFA when I signed. I’m sure this was all covered in the fine print somewhere, but nowhere was there any kind of comparison chart or obvious or clear information about whether this was the right choice for me. I guess I was stupid for not educating myself more and doing more research, but I was 22, and I was stupid enough to trust my law school both in their advice to get this loan and in their promises to me that I could expect to make massive amounts of money after graduation so loans wouldn’t be a big deal (hahahahaha HAHAHAHA ha haha.)
This is why I’m writing this Unilocal review, so that other people out there looking up MEFA will learn from my experience.
When I was still unemployed after my grace period ended, MEFA required me to make payments when the federal government required me to pay nothing. Their idea of a revised payment plan based on what I owed was to charge $ 50 for 6 months, then charge $ 100 and something for 6 months, then charge $ 200 and something for six months, then $ 300 and something for 6 months, then, to make up for the reduced amounts, charge a significantly increased amount for the remaining 8 years of their 10 year repayment plan. And once you’ve used up that plan you can never get it again so if I lost my job tomorrow I’d still be liable to them for the full, increased payment every month. They also don’t offer extended repayment plans, whereas the federal government offers 25 year extended repayment plans.
The most recent incident, which prompted this Unilocal review, happened today. Over the weekend, someone hacked my PayPal and made thousands of dollars in charges on both my credit and checking accounts. PayPal and my bank are working to resolve this and I should have all my money back and a new credit card in the next few days, but in the meantime I have a MEFA loan payment due. I called them today to let them know that all my money has basically been stolen and I’m going to have to pay a little late. I asked if I could set a later payment date or get one month of forbearance given that this is an emergency, and I was informed that MEFA doesn’t do forbearance or deferrals. Now, to their credit, they don’t charge late fees, so if I’m just a week or two late paying there won’t be any consequences. But after 60 days they send it to collections (the federal government gives you 90 days). I plan to have this taken care of in well under 60 days, but what if this were a more prolonged situation? What if I was hit by a car and in a coma for 3 months? The federal government would just let me take forbearance retroactively and that would be it. MEFA would send it to collections, apparently.
There is absolutely no reason whatsoever to use MEFA for student loans if you are able to get federal student loans. I don’t care what difference in interest there may be, because it will dramatically reduce your income in repayment, and in the event of an emergency where you can’t pay MEFA is completely unforgiving.