Their Relation to Higher Educational Finance 
113 
previous year shows that there is no uniformity in the administration of 
Student loans in the various Colleges and universities. 
In working out a policy for the administration of Student loans, it is 
desirable to incorporate all that is best from the various methods in use. 
12. Methods of Administration 
Loan funds are administered under two methods. The restricted 
method, which is loaning only the income from the fund, and the revolving 
method, which is loaning both income and principal. There are many more 
funds administered under the restricted method than there are under the 
revolving method, notwithstanding the fact that of the 93 institutions 
which answered an inquiry sent out by the Student Loan Information 
Bureau, 69 replied that they favored the revolving fund. 
The actual conditions reported show: 
CHARACTER AND AMOUNT OF FUNDS AVAILABLE 1924-1925 
Revolving $187,253 10 funds 
Restricted 704,000 12 “ 
Emergency 5,000 2 “ 
Not specified 3,205,786 288 “ 
If a large part, the “not specified” funds ($3,205,786), is “restricted”, 
as it is safe to suppose, the proportion of available funds actually to be 
classified as “restricted” is overwhelming. Much of this money was left 
in the restricted form and must continue to be thus administered. How- 
ever, it is safe to assume that there are many of these funds that could be 
placed on a revolving basis. The revolving fund has the more weighty 
arguments in its favor besides having the favorable sentiment of a large 
majority of officials. 
The greater efficiency of the revolving fund is indisputable. For 
example, a fund of $100,000 at 5% yields $5,000 annually and would be 
sufficient to make a loan of $250 to 20 students. Over a period of fifteen 
years it would be able to make 300 such loans. On the other hand, 
$100,000 if turned into a revolving fund, allowing $20,000 of the principal 
to be loaned annually for the first five years, and revolved for an additional 
ten years, would be sufficient to make 1,475 such loans which means that 
it would serve practically five times as many students. 
Some officials and donors fear that if the principal as well as the 
income is loaned, the fund will eventually disappear. This fear is well 
founded only if it is admitted that funds cannot be efficiently administered. 
Those who administer student loans can well afford to borrow some of the 
principles from the business world that make loaning in small sums suc- 
cessful. Colleges and universities that have tried these principles of busi