102

A  Study  of  Student  Loans  and

bringing  about  pressure  in  cases  where  Collection  is  difficult.  If  the  members
  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  corresponding
  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  institutions.
  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  Proportion ­
  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  successful
  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