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A  Study  of  Student  Loans  and
some  influence  which  would  permeate  all  of  American  life,  for  such  training
  and  guidance  would  soon  be  extended  to  all  people  whether  they
attended  College  or  not. 4  *  With  such  a  background  the  Student  would  enter
College  better  equipped  than  he  does  now.  His  relationship  with  the  business
  Organization  of  higher  education  would  further  his  training  in  the
management  of  his  personal  affairs  and  would  lead  him  to  see  what  he
must  encounter  in  the  outside  world  after  he  leaves  College.  Such  a  procedure
  need  not  interfere  with  the  academic  program,  but  in  fact  should
assist  it,  since  the  Student  so  trained  in  the  management  of  his  financial
affairs  will  take  such  as  a  matter  of  course  and  can  then  give  better  attention ­
  to  his  academic  life.
What  then  becomes  of  the  loans?  The  institution  would  find  that  it
could  deal  with  the  Student  on  a  business  basis,  for  he  will  expect  it  and
will  resent  in  fact  being  dealt  with  in  any  other  manner.  This  business
basis  means  the  application  of  the  highest  business  principles  in  the  business
dealings  which  the  institution  has  with  the  Student.  The  application  of
business  principles  to  Student  loans,  however,  does  not  mean  that  the
peculiar  characteristics  of  lending  to  students  will  not  be  taken  into  consideration.
  Adjustments  will  have  to  be  made,  but  this  will  not  prevent
entering  into  a  definite  agreement  with  the  Student  and  making  him
realize  the  responsibility  which  he  undertakes.  He  is  borrowing  money
for  an  economic  venture  and  should,  therefore,  pay  the  commercial  rate  of
interest.  The  term  of  the  loan  (except  when  it  is  an  emergency  loan),
should  correspond  with  the  period  of  turnover  in  College,  which  is  approximately
  five  years.  The  amount  of  the  loan  should  be  enough  to  be  of
substantial  assistance  to  the  Student.  Once  a  loan  has  been  made  to  a
Student  the  institution  should  come  to  his  assistance  with  further  loans
in  Order  to  “see  him  through”  unless  it  is  found  that  he  is  no  longer  a  good
risk.  It  is  unwise  to  require  any  security  except  a  note  of  honor.  The
Student  who  needs  the  money  most  has  no  security  to  off  er.  If  he  has
security  or  can  get  an  endorser,  there  is  no  reason  why  he  should  borrow
from  the  institution.  If,  nevertheless,  some  form  of  collateral  or  security
is  deemed  wise,  the  group  guarantee  is  then  the  best  way  in  which  to  secure
the  funds.  In  this  way  the  students  accept  collective  as  well  as  individual
responsibility.  However,  those  who  constitute  the  group  should  have  a
voice  in  the  selection  of  the  risk.
It  is  urgent  that  student  loans  be  put  on  a  business  basis.  Students
who  have  borrowed  where  loans  were  administered  in  a  business-like  manner ­
  express  preference  to  borrow  under  such  administration.  They  appre-4
  The  possibility  of  such  a  result  was  expressed  in  conversation  with  Mr.  C.  S.  Danielson  of
Columbia  University  and  Mr.  O.  C.  Tester,  Assistant  Vice-President  of  the  Bowery  Savings  Bank,
New  York  City.