Their Relation to Higher Educational Finance 117
basic unit, ten months as the unit of time and five years as the period of
the loan, an almost ideal System could be set up that would be much more
practical than any System now in use or as yet devised.
20. Collections
Very little attention has been given to this problem in most institutions.
A sound collection System must aim not only at collecting loans
overdue but must take the matter in hand soon enough so that loans will
be paid when due. This is another side of Student loans where business
principles can be taken over bodily. The final stage in a loan transaction
is to induce payment on time.
An effective collection System must be exacting, precise, and prompt.
The borrower should be sent a notice, sufficiently in advance, that his payment
is soon to fall due. If he fails to pay without explanation a second
notice should be sent. Both can be in printed or mimeographed form. If
these two reminders fail to bring in a payment or an explanation of his
failure, he can be notified in a personal way that will be suited to his
peculiar case. If the borrower is made to meet his first payments on time
he will find it easier to meet the other payments in the same manner.
21. Organization to Administer Loans
It is important to determine what Organization can best administer
such funds. There are four types of organizations that could take up this
task and see it to a successful end. They are the educational Institution
itself, the Philanthropie and semi-philanthropic foundations, banks and
trust Companies, and charitable, religious and fraternal organizations.
22. Charitable, Religious and Fraternal Organizations
In most cases these organizations administer the funds themselves.
No funds should be accepted by institutions to be administered unless
they are turned over without conditions attached. Where the College or
university has a well worked-out System of Student loans, funds turned over
to it should be with the understanding that they will be administered as all
other funds in the institution. It would seem a wise policy for institutions
to refuse to administer funds from any source unless the institution
were given a free hand in their administration.
23. Banks and Trust Companies
Banks and trust Companies have been lending money to students on a
purely business basis and have been very successful. In some cases they
bave required insurance or other collateral, in other cases organizations or
