CHAPTER IV 
THE STUDENT AS A FINANCIAL RISK 
Education as a Commercial Venture 
No well worked-out policy for the administration of Student loans 
can be arrived at without examining the value of an education to the indi 
vidual. The easiest way to measure values is, of course, in terms of 
money, and this is the value which is of greatest concern to those making 
the loans. In a general way it may be said that no bank or financial house 
of any kind will make a loan without some estimate of the ability of the 
borrower to repay. This ability is measured by the increased earning 
capacity of the individual or Corporation due to the loan. The size and 
length of the loan is proportioned to the earning capacity of the concern 
and its business turnover. Carrying these elementary principles of lending 
over to student loans, it would seem that the amount which is to be loaned 
to a Student and the length of time of the loan are to be measured by the cash 
value of the education he is to receive and how soon it will make financial 
returns to him. When a bank loans to the XYZ Corporation it has a fairly 
accurate estimate of the additional profits which this loan will enable the 
XYZ Corporation to make. So, too, when money is loaned to a Student, 
some estimate should be made as to the additional earning capacity which 
the Student will receive from such a loan—or the cash value of his educa 
tion. Care must be taken, however, not to weigh the loan against the entire 
cash value of the education, for the student is investing other funds besides 
what he borrows, and in addition to this, four years of his time which 
in itself has a monetary consideration. 
The Cash Value 
The cash value of a College education has been estimated at various 
times by different people. The most careful studies are perhaps the one 
made by Dean Lord of Boston University and the one made at North 
western University. These studies, though not intended at the time as 
a basis for making loans, form a good background for this discussion. 
Let it be understood that each university would have to make such a study 
for its own use. There are good reasons to believe that the cash value 
of a College education differs in the various institutions. It also differs 
in the several schools within the Institution and again with indi- 
viduals. There may be assigned, therefore, four elements which go to 
make up the cash value of a student’s education: (1) the individual, (2) 
the field of learning, (3) the Institution, (4) the opportunities which 
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