August 4, 2008 Money Monday: Paying for college Play video

(NECN) - College loan money is very tight for many Massachusetts families. This is due to the lack of funding from MEFA.

To discuss this and answer some questions on the problem is Barry Armstrong the financial advisor for Securities America and host of Money Matters on WBIX.

Who does it affect?

Thousands of families are significantly affected by MEFA's inability to obtain private financing. MEFA provided more than $500 million in loans last year.

What should families do?

They should contact the school they or their child attends and ask what their best plan of action should be. They must research the best alternative to pay for school because odds are they will be paying more due to higher interest rates. MEFA offered a low 6.5 % interest rate.

Tax returns and credits are available for many students. These credits include the Hope Scholarship Tax Credit and the Lifetime Learning Tax Credit. Also look into Perkins Loans, Stafford Loans, Plus Loans, Private Loans and Home Equity Loans.

Where can people go for help?

They can call MEFA at 800-809-0571 with questions about financing. They should contact their college or university. Bankrate.com also is a great resource for families searching for loan rates and aid programs.

What's next for MEFA?

MEFA will continue to search for new private financing in the next few weeks. They issued more than 40,000 loans to Massachusetts residents last year. MEFA plans on

"As soon as MEFA has secured funding, we will make education loans available," MEFA's Executive Director Tom Graf said in a statement released yesterday.

Note: If tuition is due soon, contact your college or university as soon as possible to ask for an extension on payments. Thousands of families may be caught off guard, so start researching now.