68 
A Study of Student Loans and 
In the small business concern character becomes more important; a loan to 
an individual, regardless of the assets he has at the time of the loan, is 
based primarily on character; in loaning to the Student character is the 
fundamental test. But it becomes more than an estimation of character, 
for the student’s character is in a formative period and so the loan is in 
reality based upon his character as it is expected to be rather than as it 
is. This is what makes the problem of Student loans a unique one. It may 
therefore be said that the Student has nothing to offer—not even character. 
Business principles and methods cannot be applied directly, but can and 
should be applied in a modified manner. As has just been noted, the 
student’s character is not yet fully formulated, but with a careful selection 
of the individuals, the institution can bank on the material the Student 
has for the formation of character. Having estimated this, it can then 
proceed to advance him a loan and administer it in such a way that 
not only financial Service will have been rendered, but also a Service which 
will build him up into a reliable individual. 
There is a character building power in well administered financial 
assistance to students which the institutions have been overlooking. The 
integrity of the selected Student has been established beyond question in the 
experience of institutions and individuals who have loaned money to 
students on a quasi-business basis. 33 
Reasons for Lösses 
Where loans to students have been a partial failure, one or more of 
the following reasons can be assigned: 
1. The loans have not been properly administered. 
a. Lack of a definite agreement. 
&. Student was not made to realize the Obligation he was under- 
taking—the institution failed to develop a clear-cut sense of 
responsibility. 
c. The risk was not properly selected. 
d. There were no systematic collections. 
e. No interest or too low interest. 
2. The institution failed to “see the student through.” Loans were 
made in the early part of the College career and additional loans 
were refused, which kept the student from finishing his education. 
3. The institution missed the opportunity to use loans as a character 
building weapon. 34 
33 See article by Mary B. Brady, “How Students Can Borrow Money with Character as 
Security”, Independent, Jan. 5. 1924. 
34 “If student loans are conducted on a strictly business basis, their character building value 
may be many times greater than their financial value. Traits of character developed and strength- 
ened as a result of receiving such assistance will do far more towards bringing success and 
happiness than the money alone. Self-respect is the foundation of good character and a business- 
like method of making student loans fosters this trait. However, it does not increase a student’s 
self-respect so much as it does nothing to decrease it.” 
Pansy G. Glenn of Berea College, quoted in Harnion Foundation Bulletin, June, 1925, p. 1.