Their  Relation  to  Higher  Educational  Finance

97

are  overdue  will  eventually  be  paid  in  large  measure.  Sotne  institutions
have  been  successful  in  collecting  money  after  it  has  been  out  for  as  long
a  period  as  twenty  years.  The  relative  proportions  between  the  columns
tabulated  above  are  interesting.  The  total  amount  of  money  overdue  in
135  institutions  in  1923  was  $386,816,  which  is  approximately  one-fourth
of  $1,634,795,  the  total  amount  outstanding.  To  be  exact,  23  per  cent.
of  the  total  amount  of  funds  was  overdue.  This  is  not  surprising  when
we  consider  that  most  institutions  have  no  systematic  method  of  collecting ­
  due  and  overdue  accounts.  The  total  amount  outstanding  ($1,634,795)
is  almost  double  the  amount  available  in  one  year  (1923).  In  other
words,  a  sum  equal  to  57  per  cent.  of  the  total  amount  of  funds  outstanding ­
  was  available  for  the  purpose  of  loans  in  1923,  which  is  an
exceedingly  high  proportion.  It  means  a  very  favorable  turnover  in
loans.  One-fifth  ($944,905)  or  20  per  cent.  of  the  total  amount  of  funds
originally  established  ($4,609,088)  for  the  purpose  of  making  loans  to
students  was  available  in  1923,  which  would  indicate  a  turnover  approximately ­
  every  five  years.  Taking  into  consideration  that  some  institutions
have  been  administering  their  loans  very  poorly,  it  means  that  other
institutions  must  have  been  most  efficient  in  order  to  bring  the  average
up  to  this  favorable  level.
Selecting  The  Risk
Since  the  selection  of  the  risk  is  important  in  the  successful  administration
  of  loans,  it  is  well  that  this  element  of  Student  loans  be  fully
elaborated  here  even  at  the  risk  of  repetition.  The  supposition  is  that
Student  loans  will  be  administered  under  the  same  principles  as  commercial
  loans  with  but  a  slight  change  in  these  principles  in  order  that  they
may  be  applied  to  the  student’s  peculiar  problem.
No  mechanical  device  can  be  put  forward  and  no  set  of  rules  can  be
established  to  guide  those  who  are  to  decide  which  students  are  to  be
granted  loans.  The  proper  selection  of  the  risk  is  something  that  can
come  only  as  the  result  of  experience  in  dealing  with  students.  The
student’s  present  needs,  future  ability,  and  willingness  to  pay  are  the
deciding  factors.  His  present  needs  can  be  determined  by  the  analysis
of  his  Statement  as  to  his  present  financial  circumstances.  His  present
income  consists  of  what  he  is  able  to  receive  from  home  without  depriving
other  members  of  his  family  of  a  just  share  of  the  family  income.  If
his  family  is  in  comfortable  circumstances,  there  is  no  reason  why  the
Institution  should  help  him  financially.  If  his  family  is  not  able  or
is  unwilling  to  assist  him,  he  is  then  eligible  for  a  loan,  provided  that  his
probable  future  financial  success  warrants  it.  Here  lies  the  difficulty.
His  future  financial  success  is  hard  to  estimate,  but  if  a  Student  has  a