Frequently Asked Questions
What is an Alternative Loan?
An alternative student loan is designed primarily to help students and their families pay for educational expenses that exceed other available financial aid resources such as scholarships, grants, and the Federal Loan Programs (Stafford loan for students and PLUS loan for parents). In addition, an alternative student loan is a key resource for those students and their families who do not typically qualify for many financial aid programs, but who are without adequate cash reserves to pay for a college education. Alternative student loans exist to bridge the gap between the full cost of a higher education and traditional financial aid resources.Alternative student loans should only be considered after all other low-cost, traditional financial aid resources have been fully utilized. Please keep in mind the following:
- The Federal government does not back these loans
- Borrowers and/or co-borrowers must be creditworthy
- Lenders may require that the borrower and/or co-borrowers be United States citizens or have permanent resident status
- Various origination fees, interest rates, repayment terms, aggregate borrowing limits, and other restrictions may apply
- Federal education loan programs generally have lower interest rates and more flexible repayment terms
- Many lenders do not cap the interest rate when a variable interest rate is offered
What is the difference between Private Alternative Student Loans and Federal Student Loans?
Private alternative student loans are offered by such organizations as banks, credit unions, private foundations, and state agencies. These loans are used to help families pay their share of college expenses if they are unable to do so from savings, current income or other means.All Federal loans are part of the William D. Ford Federal Direct Loan (DL) Program and are funded by the Federal Government. You are required to complete the FAFSA to qualify for federal student financial aid. The FAFSA determines your financial need. Federal student loans should be used first before applying for private alternative loans.
How is MELA's interest rate determined?
All MELA loans are funded with the proceeds of tax-exempt bonds or private financing, and no State monies are allocated to fund the program. The fixed interest rate is determined when the Authority issues new tax-exempt bonds or secures private financing and is based on the cost of funds plus an administrative spread. The administrative spread covers such expenses as bond insurance premiums, bond trustee fees, loan servicing expense, loan defaults, and other operating costs.What is the difference between a variable interest rate loan tied to Prime or LIBOR vs. fixed interest rates?
Interest rates tied to Prime or LIBOR are variable and can change as frequently as every 30 to 90 days. When the Prime Rate is raised, the interest rate of a variable student loan rate subsequently rises. MELA's fixed interest rate is determined when the Authority issues new tax-exempt bonds and is not tied to the Prime or LIBOR Rates. The interest rate on a MELA loan is fixed and remains constant throughout the life of the loan.How much do I save over the life of the loan by making interest payments?
Based on a $10,000 loan with a fixed interest rate of 7.75% with "interest only payments" you would save $1,418.21. This calculation is based on 48 months of in school enrollment, a 6 month grace period, and a repayment term of 120 months.*Interest only payments of $67.16 during 48 months of in school, then payments of $124.82 for 120 months.
How can I apply for The Maine Loan® or The Maine Medical LoanSM?
- Learn more and complete the application online. Individual downloads of the application are available on the description pages for each loan.
- You may also contact a Student Loan Specialist at 1-800-922-6352.
- Mail or fax your application to the address below:
MELA c/o MES
131 Presumpscot Street
Portland, ME 04103
1-800-922-6352
207-791-3616 - fax
What is the estimated time it takes from date of online loan application to approval of the loan?
The online application takes approximately 40-60 minutes to complete and approval is determined at that time.Do I need to have a co-signer for The Maine Loan or The Maine Medical Loan?
Creditworthy students may apply without a cosigner. Creditworthy students must have a minimum of two years credit history, a minimum of three trade lines, and meet the required minimum income and credit score.What is an application reference ID and how can I get one?
The application reference ID is a website participant number used to link a cosigner to a student's application.The student must first sign in as the "borrower" and complete their section. They will indicate the name of their cosigner along with their email address. The cosigner will then get an email, instantly, inviting them back to the site with their application reference ID. If there are two cosigners, each will get their own ID and each cosigner needs to create their own account. The reason for this is if borrowers use E-signature, there needs to be a unique PIN number assigned to each party on the note.
Do I only apply for The Maine Loan or The Maine Medical Loan when I first begin college or medical school or do I need to reapply every year?
You must reapply every year to take into account new educational costs for the current academic school year.How do I determine the loan amount for The Maine Loan or The Maine Medical Loan application?
Loan amounts are based on a maximum of one year's educational costs. Calculations are based on full cost of education for any given academic year minus any other financial aid received as determined by the financial aid office.What do I do if my school is not listed on the MELA application website?
If your school is not listed, please call us at 1-800-922-6352. Our Student Loan Specialists would be happy to check for eligibility.I am a student and do not work, can I still apply for The Maine Loan?
Yes, you may apply for The Maine Loan with cosigners. When completing the student borrower section you may list, "student" or "other" in lieu of an employer name. If you reside with family or on campus most of the year you may list your mortgage holder as "none" and the monthly payment/rent amount as "zero (0)".I go to school in another state, am I eligible for The Maine Loan or The Maine Medical Loan?
The Maine Loan and The Maine Medical Loan are available to Maine residents attending approved schools in the U.S. or Canada or to out-of-state residents attending approved schools in Maine.What is the deadline for applying for The Maine Loan or The Maine Medical Loan?
MELA does not have an application deadline for The Maine Loan or The Maine Medical Loan. We encourage you to apply anytime after June 1st for the upcoming academic school year to ensure all steps have been processed before it's time to head off to college. It is also beneficial to apply for the entire year rather than one semester at a time. This will reduce your monthly loan payment upon completion of your education.How do I change the disbursement date of a loan?
Your Financial Aid Office selects the dates of disbursement. Adjustments can be made to these dates, but only at the request of a Financial Aid Representative.If I was denied The Maine Loan or The Maine Medical Loan, can I appeal the loan decision if I have extenuating circumstances?
Yes. If you feel there may be extenuating circumstances or credit report errors, and would like to appeal this loan decision, please send a cover letter to MELA explaining the issue and documentation showing it was resolved. The cosigners will also need to provide a copy of their most recent federal tax return along with income verification. Income verification may include a recent payroll stub showing year-to-date earnings, a pension statement, social security statement or retirement benefits statement.I elected for deferment of principal and interest (loan applications received prior to July 28, 2008) but have received a billing statement from my servicer, why?
Borrowers who elect, and are eligible for full deferment of principal and interest, will still receive an optional interest only statement from their servicer. The interest accrual is reported so borrowers have the option to pay any amount, or the entire amount accrued anytime during their deferment period. If you choose not to pay, the interest will just continue to accrue and be included in the next monthly statement. There will be no derogatory action taken. MELA recommends you pay as much of this interest before the loan enters repayment for an overall lower repayment cost.Note: For Maine Loan applications received on or after July 28, 2008, interest payments are required. You should expect to receive a billing statement from Firstmark Services monthly for interest that has accrued on your disbursed loan.
How do I defer my loans if I am still in school or residency?
To defer your student loans you must be enrolled at least half-time at a MELA approved school. You may submit a letter of enrollment to Firstmark Services from the school's registrar stating your current dates of enrollment and new estimated graduation date. Please note deferment options vary, depending on your loan type and the date of your loan. For information specific to your loans, please contact our Student Loan Specialists at 1-800-922-6352 to discuss deferment options available.If you are in a medical residency and would like to defer The Maine Medical Loan, you will need to submit a letter of request from the hospital residency coordinator stating your dates of employment and expected date of completion. Medical residency deferment is available for up to four years of residency on The Maine Medical Loan.
What process do I need to follow if I am having difficulty making my loan payments?
The most important first step is to contact MELA's Customer Service and explain your specific circumstances. Customer Service will then be able to provide you with options for your specific circumstances.What are the hours of MELA's customer service?
MELA Customer Service Representatives are available Monday - Friday, 8:00 am - 4:30 pm (EST) at 800-922-6352 and via email customerservice@mela.net.In addition, Firstmark Services, LLC provides loan servicing for MELA and their customer service representatives are available from 8:00 a.m. to 8:00 p.m. (EST) Monday through Friday at 888-538-7378. In addition, borrowers have 24/7 access to their account information via Firstmark's website, www.firstmarkservices.com.
Where is MELA located?
MELA is located at 131 Presumpscot Street in Portland, Maine 04103.What is the FAFSA?
The Free Application for Federal Student Aid (FAFSA) is the first step in the financial aid application process. It is used to determine federal student financial aid, such as Pell Grants, federal student loans, and work-study. Complete and submit the FAFSA in time to meet school and state aid deadlines. Apply online by going to www.fafsa.ed.gov.What is a FICO® Credit Score?
FICO® scores are the credit scores most lenders use to determine your credit rating. You have three FICO® scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. A FICO® score can range from 300 to 850, with 850 being the highest score available. The higher your credit score, the more likely you are to be approved for credit or offered favorable terms. Before making a loan, a bank or financial institution will attempt to determine your "creditworthiness." Creditworthiness is the likelihood that you'll pay back the money you borrowed in a timely and responsible manner. To help financial institutions determine your creditworthiness, they will access your credit report. For more information, visit www.myfico.com.What does Debt-to-income ratio (DTI) mean?
In addition to your credit score, many lenders will look at your ability to repay debt. This is most commonly done using a debt-to-income ratio often abbreviated as DTI. DTI is the percentage of a consumer's gross income that goes toward paying all recurring debt payments, including rent, mortgage, credit card payments, car loan payments, student loan payments, and legal judgments (such as child support or alimony, if disclosed). What's a High Debt-To-Income Ratio? If your DTI ratio is more than 50%, you probably have too much debt. That means, you're spending at least half your monthly income on debt. Ideally you want to have a DTI ratio that's less than 36%. That means you have a manageable debt load and money left over after making all your monthly debt payments.What is Opportunity Maine?
The Opportunity Maine Program is a bold, practical, and universal promise to reward hard work and a commitment to Maine with educational and economic opportunity.The Educational Opportunity Tax Credit reimburses Maine workers for student loan payments for those who earn an associate or bachelor's degree at a Maine school and continue to live and work here after graduation. Alternatively, businesses that pay employees' student loans as an employee benefit will be able to claim the tax credit, providing a strong incentive to expand or locate businesses here in Maine.
This will remove a major financial barrier for those who thought going to college was out of their reach, and will be a strong incentive for college graduates to start their career, family or business here in Maine. For more information, visit www.opportunitymaine.org.
