Massachusetts Educational Financing Authority

This is a state performance audit of certain activities at the Massachusetts Educational Financing Authority, covering July 1, 2012 through June 30, 2014.

“In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Massachusetts Educational Financing Authority (MEFA) for the period July 1, 2012 through June 30, 2014.”

The audit focused on MEFA’s college savings plans, especially the U.Plan and U.Fund programs.

“This audit was undertaken to review certain activities of MEFA related to its college tuition savings plans, including the U.Plan Prepaid Tuition Program and the U.Fund College Investing Plan.”

MEFA exists to help schools and families handle college costs, so its savings and financing programs affect people planning for higher education.

“MEFA’s primary purposes are to help institutions of higher education with financing and refinancing education costs and help individuals with planning and paying for college.”

If you save or plan to save for college in Massachusetts, this audit says the reviewed parts of MEFA’s U.Plan and U.Fund operations had proper controls.

“To that end, MEFA offers the following financing/savings options: (1) MEFA loans at fixed interest rates with various repayment options for students who are residents or students of colleges in Massachusetts; (2) the MEFA U.Plan Prepaid Tuition Program (U.Plan), a prepaid tuition program that caps college tuition at today’s costs at 80 Massachusetts colleges and universities; and (3) the MEFA U.Fund College Investing Plan (U.Fund), the Massachusetts 529 college savings plan,1 which offers a tax-advantaged method for college savings.”

The auditor answered yes to all three audit questions: fees, U.Plan purchases and payments, and inactive U.Plan accounts were handled properly in the samples reviewed.

“Below is a list of our audit objectives, indicating each question we intended our audit to answer and the conclusion we reached regarding each objective.”

The report does not list corrective actions; MEFA reviewed the draft and had no comments.

“MEFA responded that it had reviewed our report and did not have any comments.”

The audit gives the public some confidence that, for the period reviewed, MEFA’s controls over these college savings activities were adequate.

“We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.”

U.Plan means a prepaid tuition program; U.Fund means the state’s 529 college savings plan, a tax-favored way to save for education expenses.

“Established in February 1995, the U.Plan is a prepaid tuition program offered at participating colleges and universities in the Commonwealth.”