66 
A Study of Student Loans and 
The other factor in analyzing the Student as a credit risk is his ability 
to cash in later. In extending credit to an individual or Corporation the 
all important point is whether the borrower will be in a position to repay 
the loan when due or be at least as good a financial risk as when the loan 
was made. The first, character and definiteness of purpose, is but a basis 
upon which to estimate the second. The Student, for instance, who has 
no definite plan for financing himself and is doing nothing to help pay 
his expenses could hardly be considered as a good risk. 
Credit As Applied to Education 
There are only a few institutions which have taken over business 
credit principles in the administration of their loans. It has been their 
experience that even though they were eager to apply such principles to 
educational credit, it was not possible to do so directly. This is not 
surprising. Business credit methods can only be drawn upon in working 
out an educational credit System and not applied directly. They must be 
attuned to fit the purpose. It must be recognized that though education 
has a business side, it also has the academic side, which by its nature 
must conform to other Standards than those merely of business. Further, 
those seeking educational credit are young people, many of whom have 
had few responsibilities and are not in an advantageous position to judge 
the future. They have not yet learned to manage their personal affairs. 
The Student, therefore, must be treated differently from the business 
man when credit is being extended. But this treatment, for his own 
good, cannot be lax or indefinite. He must be made to feel the respon- 
sibility he is undertaking and assisted by proper administrative methods 
to carry out his contract. The commercial business methods must there 
fore be readjusted to the business of education; the analysis of the risk 
must be made differently; the credit term must be longer; the methods 
of payment and collections must be revamped. 
Training To The Student 
When credit is extended to a Student, the transaction, if properly 
administered, has three values; it gives him a valuable business training; 
it gives him a credit rating; and it assists him to make a good investment. 
The average Student when he enters College has had very little experience 
in dealing with others in a business capacity. The institution, therefore, 
has an opportunity to give him a training in practical business which may 
prove as valuable to him as his academic life. It follows that the placing 
of Student loans on a business basis will have a double benefit. It will 
give the Student a business training at the time he needs it most and it will