The Commonwealth of Massachusetts’ public, state-run student loan agency, the Massachusetts Educational Financing Authority, or MEFA, announced yesterday that they’re withdrawing from the federal student loan program as of July 1, 2008. Here’s their press release in its entirety.

Effective July 1, 2008, MEFA is suspending all Federal education loans, including the Stafford Loan for undergraduate and graduate students, PLUS, and Graduate PLUS. Additionally, effective immediately, MEFA will not accept any new Federal Consolidation applications. The unprecedented disruption in the capital markets coupled with federal changes has prevented MEFA from securing funds for its federal education loan programs.

MEFA is making this announcement now so that parents and students who were planning to borrow a federal education loan from MEFA have the time to make alternative plans for the fall 2008 semester. MEFA encourages families to maximize use of Federal education loans, and MEFA customer service representatives are available to assist Massachusetts students and families with identifying and evaluating FFELP Loans from other education loan providers.

Rest assured that MEFA remains hopeful and diligent in its efforts to raise the necessary capital to provide private education loans in 2008-2009. MEFA’s decision to suspend federal education loans for the 2008-2009 academic year is not related to the availability of MEFA’s 2008-2009 private education loans.

MEFA is working diligently to provide families with its flagship fixed interest rate education loan. In an economy where prices of everyday goods and services are increasing, an education loan that offers a stable, fixed interest rate, allows families to count on the same monthly payment regardless of changes in the global credit and liquidity markets. For nearly thirty years, MEFA has served the students and families of Massachusetts by providing just such a fixed interest rate education loan. MEFA will announce the availability of its 2008-2009 private education loans as soon as possible.

Nearly thirty years ago, MEFA was created at the request of Massachusetts colleges and universities to increase access and to promote the economic development of the higher education industry. MEFA remains dedicated to its public service mission, despite the current disruptions in the capital markets. MEFA continues to offer outstanding college financing and planning seminars, college savings programs, and responsive customer service for all families.

The Student Loan Network, a Massachusetts-based federal student loan lender, stands ready to help students whose federal student loans were issued through MEFA with our federal student loans at StaffordLoan.com, ParentPLUSLoan.com, and GradLoans.com. By law, all federal student loans including ours have identical rates and promissory note terms, so you won’t be negatively impacted in any way by changing lenders.