102 
A Study of Student Loans and 
bringing about pressure in cases where Collection is difficult. If the mem- 
bers of the group are to be responsible for their fellow members, they 
are entitled to a voice in the selection of those composing the group. This 
arrangement will be much more effective if it is done arnong groups 
already in existence, such as the College dass, the callege, the correspond- 
ing dass in different Colleges and the alumni. So far as can be seen at 
present, such a group guarantee plan when well administered is the best 
and soundest method by which to administer loans. It is the only form 
of security which lends itself effectively to Student loans. 
Term of Loan 
The term for which loans are granted differs widely in various insti- 
tutions. According to information made available on this point the present 
policies are in effect: 
Term of L,oan 
Total 
5 years after graduation 
4 i< « ii 
^ ii ii ii 
2 “ 
Repayment before graduation 
10 years from date of loan.. 
9 
8 
7 
6 
S 
4 
3 
2 
1 
Number of Institutions 
Reporting 
110 
14 
2 
4 
4 
31 
2 
!.!! 2 
i 
1 
2 
1 
6 
2 
6 
10 
12 
The Situation as revealed by this data is astonishing. What is 
apparently a simple problem is being handled in sixteen different ways in 
110 institutions. Regardless of what local conditions are, they ought not 
to influence greatly the term of the loan. Loans to students are in part 
investment loans and in part commercial loans. In determining the term 
of the loan, it is therefore possible to apply the same principles that prevail 
in investment banking and in commercial banking. Accordingly both 
long term and short term loans are made to students. The short term 
loans are for emergency purposes and should constitute a small Propor 
tion of all those made. The long term loans are made to assist the 
Student to finance himself through school and therefore repayment in the 
near future cannot and should not be expected. If the loan is to be suc- 
cessful and the terms of the contract complied with, it is necessary that 
such terms be in conformity with the period of turnover in the business