122 
A Study of Student Loans and 
At the time of writing, only three per cent. of the money that has 
become due is ninety days or more in arrears. Toward the end of each 
month the percentage of the total overdue items is about eight, but a 
large part of this is delinquent only during the current month and is met 
at the next pay day. There have been no repudiations of loan obligations. 
Even in the case of the three borrowers whose accounts have been turned 
over to the Foundation’s attorney for collection, the debt has been openly 
acknowledged and the Statement made that the intention is to pay. The 
difficulty is that the borrowers who have allowed their accounts to fall 
behind have not taken advantage of the Provision in their contract to 
arrange for an extension of time, if for valid reasons they are unable to 
make specified payments. They fail to realize that the Foundation Stands 
in exactly the same relation toward them as if it were a bank and that 
negligence or late excuses when they have to be forced, will not be toler- 
ated. Their attitude represents an undeveloped rather than a warped 
conscience. 
It is confidently expected that the guarantee requirement will even- 
tually be cut from ten to five per cent. This cannot be done, however, 
until the course of repayment has been studied for a longer time, and, 
more important still, until the methods of collection have been more defi- 
nitely developed, both as to office procedure and tradition of repayments 
has spread among successive groups of borrowers. 
The group guarantee has proven the only part of the plan that has 
not been accepted easily by those who are studying the administration of 
loan funds. While the Division of Student Loans does not regard its 
form of safeguarding the fund an ideal feature, it does maintain that this 
method of handling the problem is the least objectionable, least cumber- 
some, and by far the most economical to the Student and the administer- 
ing Organization. It obviates the necessity of a heavy Service charge, 
property collateral, or the assignment of personal life insurance where 
the family should properly be the beneficiary. In other words, the 
Harmon Loan Plan has been arranged in this respect so that the man or 
woman who borrows may finance his education in part at least, arranging 
for repayment after graduation in such a way as not to be handicapped 
too greatly in his business or private undertakings. 
In the Operation of a Student loan fund, especially where the princi- 
pai is used, obviously some form of protection is necessary. Where large 
groups are concerned, some defaults are inevitable. In this Connection 
it should be emphasized that only a small number, not more than one- 
half of one per cent. at most, will occur through death. Insurance may 
take one of several forms, but owing to the over-head it is relatively expen- 
sive in any form.