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A Study of Student Loans
Loans in excess of this amount should be rare and made only after the
most careful investigation.
5. Interest.—Interest should be at the current commercial rate, gen-
erally six per cent., starting from date of loan.
6. Security.—The borrower should always sign a definite contract.
In the case of revolving funds, loans should be protected by a group guar-
antee. When a large number of loans are made annually, the group should
consist of those borrowing in the same year; when only a few loans are
made each year, the group may consist of several consecutive classes.
Borrowers should be made to understand that it is a business transaction
and will be treated as such.
7. Repayments.—The loan should be repaid in installments beginning
not more than one year after graduation or withdrawal from the institution.
Not more than five years should elapse from date of loan before the first
payment is made. An amortization plan can be used which includes
interest, guarantee fund and principal, payments to be arranged in install
ments of not less than five dollars a month or more than fifteen.
8. Collections and Delinquencies.—A prompt and exact follow-up
System should be used, with the same ethical considerations that would
control a wisely conducted bank.