Tiieir Relation to Higher Educational Finance
69
Endorsements
Notwithstanding that it has just been pointed out that the Student
has only himself to offer, there are many institutions which require different
forms of endorsements. These ränge all the way from the endorsement
of a guardian to bankable collateral. The study made by the Student
Loan Information Bureau revealed the following information on this
Security No. Institutions
Note, one endorser 52
Personal note only 51
No security 24
Note—no endorsement except if minor 8
Life insurance 5
Unclassified security 5
Note, two endorsers 4
Note, collateral and endorsement 3
Note, guardian and parent guarantee 2
Bond with three signatures 1
Endorsement of two faculty members 1
Life insurance or real estate 1
Bankable note 1
It is difficult to understand why matters should be as they are and
what value is to be derived from requiring such endorsements and collateral.
Where bankable collateral is required, the institution is really rendering
the Student very little Service unless it is by way of charging him
a lower rate of interest than at the bank. If the endorsement is that of
a property holder, it has value as security and in helping the institution
to form a judgment of the borrower. The endorsement by faculty members
is not widely used. This is encouraging since such a practice is
undoubtedly unwise. The guardian or parent guarantee is of questionable
worth even where the borrower is a minor. It shifts the responsibility
from the Student at a time when he should be acquiring independence.
There is nothing of soundness in all the other forms of guarantee with
the exception of an endorsed note and but little good can be said of this.
Since the institutions seldom press the endorser in case of default, the
requirement of such an endorsement is superficial and burdensome. No
reason can rightfully be assigned for such a guarantee since it is a
foregone conclusion that it will not be made use of.
On the other hand, it is harmful in that it denotes a lack of confidence
in the Student and insincerity on the part of the institution. To put it
more direct, the institution is simply bluffing the Student. It is just as
dishonest on the part of the institution to fail to carry out parts of the
agreement which it requires as it is for the Student to fail to pay when he
is able to do so. This phase of Student loans has been most lacking in
principles. This form of guarantee is the most widely used of any and,
as presently administered, is perhaps the most increditable one.
