Their Relation to Higher Educational Finance 117 
basic unit, ten months as the unit of time and five years as the period of 
the loan, an almost ideal System could be set up that would be much more 
practical than any System now in use or as yet devised. 
20. Collections 
Very little attention has been given to this problem in most institu- 
tions. A sound collection System must aim not only at collecting loans 
overdue but must take the matter in hand soon enough so that loans will 
be paid when due. This is another side of Student loans where business 
principles can be taken over bodily. The final stage in a loan transaction 
is to induce payment on time. 
An effective collection System must be exacting, precise, and prompt. 
The borrower should be sent a notice, sufficiently in advance, that his pay 
ment is soon to fall due. If he fails to pay without explanation a second 
notice should be sent. Both can be in printed or mimeographed form. If 
these two reminders fail to bring in a payment or an explanation of his 
failure, he can be notified in a personal way that will be suited to his 
peculiar case. If the borrower is made to meet his first payments on time 
he will find it easier to meet the other payments in the same manner. 
21. Organization to Administer Loans 
It is important to determine what Organization can best administer 
such funds. There are four types of organizations that could take up this 
task and see it to a successful end. They are the educational Institution 
itself, the Philanthropie and semi-philanthropic foundations, banks and 
trust Companies, and charitable, religious and fraternal organizations. 
22. Charitable, Religious and Fraternal Organizations 
In most cases these organizations administer the funds themselves. 
No funds should be accepted by institutions to be administered unless 
they are turned over without conditions attached. Where the College or 
university has a well worked-out System of Student loans, funds turned over 
to it should be with the understanding that they will be administered as all 
other funds in the institution. It would seem a wise policy for institu 
tions to refuse to administer funds from any source unless the institution 
were given a free hand in their administration. 
23. Banks and Trust Companies 
Banks and trust Companies have been lending money to students on a 
purely business basis and have been very successful. In some cases they 
bave required insurance or other collateral, in other cases organizations or