Their Relation to Higher Educational Finance
105
tion during the summer months; second, the loan would be easier to
administer in this manner since it could be extended in monthly allowances
during the academic year and repaid on the corresponding dates five
years later deferring a certain per Cent, of each monthly allowance to the
corresponding dates of a later year, the amount deferred being in accordance
with the amortized plan for repayment. It may seem involved to
attempt such a method but, with the working out of suitable tables, it
would become practically automatic and require very little bookkeeping.
It would be highly commendable if the amounts loaned were made in
multiples of $10 in all institutions. Ten dollars is sufficiently small to
meet all requirements. If a Student wants $25 he can either get along
on $20 or use $30 to advantage. The adoption of such a unit would
simplify matters considerably and institutions could then cooperate in
the printing of tables, record blanks, and necessary forms for the carrying
out of such a System. Using $10 as the basic unit, ten months as
the unit of time and five years as the period of the loan, an almost ideal
System could be set up that would be much more practical than any now
in use or as yet devised. With the necessary printed tables the System
would be simple to operate.
Collections
It has been found that there exists no consistency of thought in regard
to the selection of the risk, the size of the loans, interest rates, security,
the term of the loans or methods of repayment. In so far as the Collection
of Student loans is concerned, a certainty of System is lacking.
Very little attention has been given to this side of the question in most
institutions. In general, they have had no collection Systems; those that
have attempted to collect have done so only after loans were long overdue
and the borrower had grown callous in his attitude toward his College
loans. In many cases he has found it good business not to pay his College
loan on which he paid little or no interest and instead to put his money
into commercial and investment ventures which net him a good return.
After the loans have been permitted to lapse for some time without reason,
collection is all the more difficult. A sound System must aim not only at
collecting loans overdue, but must take the matter in hand soon enough
so that loans will be paid when due. This is another side of Student loans
where business principles can be taken over bodily. The final stage in a loan
transaction is to induce payment on time. Institutions, even where otherwise
successful, have not properly analyzed this end of the loan contract
and seldom have they undertaken to close the transaction in a businesslike
manner. Their appeals for the payment of loans overdue have not
