104

A  Study  of  Student  Loans  and

repayment,  and  twenty-nine  reported  that  it  was  optional  with  the  Student
as  to  which  method  he  wished  to  adopt.

The  same  may  be  said  of  the  method  of  repayment  as  has  been  said

of  the  term  of  the  loan.  There  is  no  reason  for  different  institutions  to
adopt  opposite  methods  of  repayment.  That  workable  method  which  is
best  for  one  institution  is  usually  best  for  the  others.  Students  of  all
Colleges,  as  a  group,  go  through  similar  experiences  after  leaving  College
and  the  method  of  repayment  which  is  the  most  convenient  and  effective
for  the  students  of  one  institution  is  equally  practical  for  the  students
of  other  institutions.
A  Student  who  must  borrow  to  go  through  College  will  not,  for  several
years,  be  in  a  position  to  pay  off  a  note  of  a  few  hundred  dollars  all  at
once.  When  an  institution  requires  payment  in  full  at  a  specified  time,  it
is  requiring  the  impossible  unless  the  note  falls  due  four  or  five  years
after  graduation.
Even  then  it  is  a  bad  policy  from  the  standpoint  of  the  institution
because  although  the  student  cannot  pay  the  entire  amount  before  several
years  have  elapsed,  he  would  be  able  to  pay  small  periodical  installments.
This  would  keep  his  interest  in  the  loan  alive,  would  render  repayment
easier  for  the  student,  and  would  make  some  of  the  funds  available  to  be
reloaned  sooner.
The  installment  method  of  repayment  is  by  far  the  best  and  it  need
not  entail  as  much  accounting  as  might  be  supposed.  There  are,  however,
  several  kinds  of  installment  payments,  some  of  which  can  be  adjusted
to  meet  the  student’s  peculiar  needs.  The  amortized  form  is  no  doubt  the
best.  It  is  peculiarly  adopted  to  the  student’s  economic  progress.  After
leaving  College,  the  student  will  be  able  to  work  off  increasingly  larger
payments  as  he  becomes  better  established  and  his  income  increases.  The
interest  on  the  loan  can  thus  be  included  in  each  payment  and  will  not
fall  due  in  a  large  amount  at  an  inopportune  time.  Since  the  student  will
be  able  to  make  increasingly  larger  payments,  it  is  right  that  he  be  required
to  do  so  in  order  that  the  money  be  released  sooner  to  be  reloaned  to  new
students.  It  may  be  said  in  passing  that  graduates  who  are  able  to  turn
their  College  loans  into  commercial  loans  should  be  encouraged  to  do  so
in  order  to  make  the  money  available  sooner  for  more  loans.  It  would
not  be  difficult  to  carry  out  such  a  policy  if  graduated  students  were  approached
  in  the  right  manner,  individually  or  through  the  alumni.
The  size  of  the  payments  should  be  very  small  at  first  and  gradually
rise  each  successive  month.  Monthly  installments  are  perhaps  the  best.  It
is  a  good  plan  to  arrange  that  payments  fall  due  only  during  the  ten
academic  months.  There  are  two  reasons  for  this:  first,  the  student  is
better  able  to  pay  during  these  months  since  he  must  provide  for  vaca-