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A  Study  of  Student  Loans

Loans  in  excess  of  this  amount  should  be  rare  and  made  only  after  the
most  careful  investigation.
5.  Interest.—Interest  should  be  at  the  current  commercial  rate,  generally
  six  per  cent.,  starting  from  date  of  loan.
6.  Security.—The  borrower  should  always  sign  a  definite  contract.
In  the  case  of  revolving  funds,  loans  should  be  protected  by  a  group  guarantee.
  When  a  large  number  of  loans  are  made  annually,  the  group  should
consist  of  those  borrowing  in  the  same  year;  when  only  a  few  loans  are
made  each  year,  the  group  may  consist  of  several  consecutive  classes.
Borrowers  should  be  made  to  understand  that  it  is  a  business  transaction
and  will  be  treated  as  such.
7.  Repayments.—The  loan  should  be  repaid  in  installments  beginning
not  more  than  one  year  after  graduation  or  withdrawal  from  the  institution.
Not  more  than  five  years  should  elapse  from  date  of  loan  before  the  first
payment  is  made.  An  amortization  plan  can  be  used  which  includes
interest,  guarantee  fund  and  principal,  payments  to  be  arranged  in  installments ­
  of  not  less  than  five  dollars  a  month  or  more  than  fifteen.
8.  Collections  and  Delinquencies.—A  prompt  and  exact  follow-up
System  should  be  used,  with  the  same  ethical  considerations  that  would
control  a  wisely  conducted  bank.