Their Relation to Higher Educational Finance 
75 
By grouping in this manner those administering loans could reach 
the defaulting borrowers through the alumni association and a rivalry 
could be set up between the different classes as to which would have the 
best record at the end of, say, ten or fifteen years. The assessment for the 
guarantee fund could be placed on the borrowing group in the dass, the 
borrowing groups in the entire institution, and the borrowers of the 
corresponding dass in all institutions. 
Thus the insurance would come from the dass group, the College 
group, and the intercollegiate dass group in the case of funds adminis- 
tered by an outside or intercollegiate Organization. If it is a College fund, 
the intercollegiate element should be omitted. Such a form of guarantee 
should be more effective than one where there exists no connection except- 
ing the loan connection. 
It may be said, then, that the group guarantee plan is sound both in 
principle and practice and is the most effective means to administer funds. 
As used at present, the only objections are the form of grouping and the 
allocation of charges for the guarantee fund. The groups should be large 
and in accordance with already existing groups—the dass, the College, and 
those of the corresponding dass in the different Colleges and universities. 
Organizing a certain number of borrowing members of a dass in this 
manner, they, in conjunction with the business officers of the university, 
could pass upon the eligibility of other members of the dass who 
wished to borrow. This should be a most effective manner in which to 
select the borrowers. The students know the members of their own dass 
better than the faculty or business officers. It would also eliminate the 
element of Unfairness which exists under the present group guarantee 
plan, namely, making students responsible for others when they have had 
no part in the selection of the risk. If all the members of the group are 
to be responsible for individual defaults which occur, then they should 
have a voice in the selection of their fellow members. Thus with a 
different form of grouping, the giving to the members of a group a voice 
in the selection of additional members and different allocation of charges 
for the guarantee fund, the group guarantee should be most commendable. 
Disposing of the Guarantee Fund 
After having decided that the guarantee fund is desirable as an assur- 
ance and as a source of pressure to force payment, it becomes necessary 
to provide for the handling of such a fund. The amount required 
should be sufficient only to cover losses and the remainder should be 
refunded. It should be possible, after sufficient experience, to make the 
surcharge for this purpose just enough to cover losses with perhaps a safe 
margin.