The Kept Student

I

THE wide oak door with the inscription ‘ Office of the Dean ’ opens, and a young man comes out. He has been to talk with the Dean because, like hundreds of other undergraduates to-day, he must borrow money if he is to complete his college course.

There is nothing unusual about the boy. He is an ordinary-looking chap in a sack suit. The Dean sees in him a fairly commonplace undergraduate without, perhaps, much cultural color or distinction. He does not wear a Highland plaidie or the boots of a mountaineer, or the smock and beard of a Russian peasant. Yet the fact is that this lad, entering into a business relationship, brings with him an equipment of habits and prejudices derived from his home people which, to the experienced eye of the loan expert, mark him as definitely as the golden fingernail shield marks the mandarin. As a borrower, he now becomes one figure in an index to the financial reliability of races and types — an index of considerable interest.

This index is the report of a foundation which has had outstanding loan contracts involving almost $1,000,000 — contracts made with students in more than a hundred colleges. The experience of this foundation covers the last eleven years, a period of sharp ups and downs in the financial world. It cannot be said, therefore, that its findings are explained by the depression any more than by the boom. Its client has been youth, coming from widely different backgrounds.

The foundation exists, not primarily to make loans, but rather to study, through its case histories, the whole question of student loans. Its programme, then, is experimental, and involves the test of student character and group responsibility as a basis of student credit. Once it accepts a student as a borrower, it is bound to be interested in him as an individual. Basically, however, he is an ingredient in an experiment, in which the action and reaction of the college are as important and interesting as his own.

The method of selection places the responsibility for the choice of the student on the college. No one ever walks directly into the office of the foundation and borrows money. All negotiations are carried on through college student loan committees on the basis of a careful examination of character, home background, need, scholarship, industry, and health, the questions being furnished in printed form by the foundation.

Its clients are students recommended by the college authorities and presumably selected with great care as good risks. Their credentials are those of group credit. They are required to sign agreements to repay the borrowed money in fixed sums at stated times. No collateral is given or asked.

II

In the foundation records racial groups show marked traits. Low on the list, where one might expect to find a retarded race, are the Negro students. A number of influences combine to make them difficult problems financially.

The first is the fact that the Negro cannot compete economically with the white man, or at any rate not on equal ground. He is denied admission to many labor unions. From some he is barred by provisions in the constitution of the brotherhood, from others by custom. As a rule he receives lower pay than the white laborer. The educated Negro comes out of school to find most white-collar jobs closed to him. He is generally excluded from merchandising, clerking in retail shops, and from clerical and stenographic work. These things combine to hold the Negro back economically.

In addition to the disadvantages under which he stands in the labor market there is another unfavorable influence at work. Many Negro students have grown accustomed to receiving charitable aid, and, like most wards of paternalism, they sometimes tend to feel that the world owes them a living. Negro leaders realize how difficult it is to get members of their race out of their attitude of dependence and to teach them to stand on their own feet. These facts help to explain the Negro’s position on the list. And, in justice, it must be added that encouraging payments have recently come in from Negroes.

Heading the list in prompt payments, in the latest analysis, are the German exchange students. These men and women, older than the college undergraduates here, correspond in age to our postgraduate students; but to offset the advantage of maturer years they have had to contend against a rate of exchange unfavorable to them, and the German bank failure of 1931. ‘In view of the great distress among the intellectuals in that country because of low wages and serious unemployment,’ reads a report, ‘ this is considered quite a remarkable record and is indicative of the very high standard of financial performance to which the German university graduate holds himself. With many of our young American borrowers, good business is the motive behind prompt payment; with the German group, personal honor and a feeling of individual responsibility for their country’s reputation at all cost have characteristically been the outstanding influences.’ This statement was made before the present German Government came into power. What effect Hitlerism will have it is too early to say, but there is no doubt that some decided effect will be noticed, for the barometer of youth is extremely sensitive.

Sympathetic liberals might hope to find that borrowers of Jewish descent, noted for their racial solidarity, would be governed by a pride for their good name which would make them excellent risks. In certain groups this is indeed the case. Where the family background is good, the sense of responsibility is strong; Jewish families, for example, who have lived in cities where there was little social discrimination against them provide a background favorable to integrity.

Very often, however, there seems to be a lack of training for social responsibility among the Jews. A behaviorist would no doubt inform us that this lack is not due to any inherent racial defect, but to the unfavorable conditions under which the families involved have all too often had to live. Notably philanthropic, when well-to-do, as borrowers they nevertheless exhibit, in certain instances, the characteristics of an oppressed people. They tend to evade collections, and to carry into an obligation contracted on the basis of personal honor and credit the methods of sharp business. This lack of social responsibility and coöperation is the inevitable sequel where there is a history of persecution, social ostracism, or exclusion from civil rights.

III

The average ‘American’ undergraduate makes a fairly good showing as to character. He exhibits very little deliberate dishonesty. Norman Douglas, in his satirical novel, South Wind, creates a Russian order which he calls the ‘Little White Cows.’ If, he says, they fail to pay their bills, they do so not out of natural dishonesty, but because they have no money! Perhaps it is even more true that they have no plan; and this is the weakness of the average college graduate. Less than one per cent of the borrowers in this group have attempted to evade their responsibilities by moving without notifying their creditors of their whereabouts, changing names, or using some device to escape detection. Bad debts seem to be due to inefficiency, to lack of sturdiness in certain social and professional groups, and to defects in education.

In certain parts of the country economic disasters have undermined morale. Some are recent, others, like the Civil War, occurred long ago. It seems to be true that the attitude of the borrower toward his debt is dependent to a considerable degree upon the economic condition of his section. In parts of the South, for example, where people have for years struggled against debt, payments are poor even after the debtors have secured good positions. Among people who have, perhaps with some justification, looked on themselves as aristocrats, the rising young business or professional man often finds it hard to make money. He may get the ‘best trade’ only to discover that the best trade is very slow to pay its bills. He then takes on the mental attitude of the society in which he lives. Long-continued indebtedness apparently dulls the sensibility to debt and makes the borrower indifferent to appeals for payments.

It is somewhat surprising to find that the records show very little difference between the performance of men in paying debts and that of women.

Marriage may prove a more serious handicap to women debtors than to men, and often does. When brides do not tell their husbands about the dowry of debt until some time after marriage, the husbands are sometimes disinclined to assume the obligation. With mothers, the needs of babies frequently, and perhaps naturally, take precedence over the demands of the loan corporation. Widows with sons to educate often prove unreasonable about debt. The widow and the orphan are a combination formidable to the philanthropist, for when mother love gets the bit in its teeth the rights of others are likely to be thrust aside.

Nevertheless women are as good risks as men; and no better! Occasionally an educator comes forward with the statement that college women are more conscientious about meeting their financial obligations than college men. The figures with which we are dealing here do not authorize us to make such a distinction. Rather, one concludes merely that women pull their own weight in the boat about as well as men. In a delightful book called The Lady, Mrs. Emily James Putnam reminds us that it is only in periods noted for luxuries that there are any ‘ladies’ at all! In sturdier societies there are merely women. The war made thousands of ladies into women, and the depression carried on the process. Women assumed much more economic responsibility than they had hitherto had. Apparently they meet their debts in the same spirit as do their brothers.

IV

No general figures are given on the men who go into business. They apparently take on the color of their background. There is a great deal said, however, about professional men.

Among professional men, engineers are the best pay. It has been said that engineers are the happiest of God’s creatures. They deal in facts; they see a task, and they do it. Their work, always difficult and challenging, seldom proves impossible. They have a tradition of accomplishment. It is merely in keeping with their whole habit of life and thought that, if they have debts, they try to pay them. It is interesting to note here that the kind of mental training they have had seems directly to produce responsibility in money affairs, a result of education so unusual as to be almost unique!

Poorest in repayments are ministers. One would like to suggest here that, in contrast to engineers, ministers constantly attempt the impossible (even to attempting to live on impossibly small salaries). It is their profession to try to attain the unattainable; in fact, one might almost make it a test of the sincerity of a man of God that he come away from his work with a sense of defeat, saying, with Francis Thompson, ‘Oh my dreams, my poor dreams!’ Perhaps, however, since we are concerned here with practical matters, it is safer to examine other characteristics of the ministry to find the reason why men of so high a type often give so poor a performance.

The first cause is, without doubt, the small salary. Compared with that of the engineer, the income of the average minister ranks with that of the machine-shop hand. Because of poor pay, ministers have been obliged to accept help in maintaining their homes and in educating their families from outside individuals and groups, and have grown used to it. Money which should in all fairness have been paid to them in salary has been doled out paternalistically by organizations and by individual parishioners. Apparently this paternalism tends to weaken the sturdy fibre of the ministerial group. One gathers from their records that some ministers seem to feel that the college or the public owes them the price of an education, and those who adopt this view take a rather easy attitude toward debt. The secretary of the foundation puts it very neatly when she says that, being charitably-minded, they are also inclined to take a very charitable view of their own indebtedness.

The foundation has not dealt with artists as such. A very similar point of view, however, is frequently found among devotees of the arts. There was in New York a famous old character of some artistic ability who lived for years on money borrowed, a few dollars at a time, from his friends. Delightful and well bred as he was, it was difficult for him to conceal the contempt he felt for materialistic people who always had money in their pockets to lend. He referred to them in private as having the minds of shopkeepers. The artist is often convinced that the community is lucky to have him (as it undoubtedly is), and that it ought to show its gratitude.

Certain other professions have their own attendant problems. Both law and medicine require long years of preparation, so that payment of debts must often be deferred. The professional man is dependent to a peculiar degree on the community for support. Figures which show only one colored doctor to a colored population of 30,000 seem at first glance to indicate a successful practice. But if 29,800 out of that population are too ignorant to consult a doctor, and if the remaining 200 are too poor to pay their bills, the doctor may starve. Even in the best of practices, slow pay for the medical man has been notorious in the last few years. Local conditions affect the lawyer, too, although his position toward the close of the depression recalls to the historically-minded person the fact that in France it was the lawyer who survived the Revolution!

V

The college itself also exerts a determining influence on the undergraduate borrower. Payments tend to be poor if the institution is split up into warring factions. On the other hand, a warm college-family life encourages the development of a sense of responsibility. This is due in part, no doubt, to the importance and prominence of the individual boy or girl in the smallcollege circle.

In the college with a deeply spiritual life there is, the foundation finds, a kind of ethical leaven in the community which makes for responsibility in action. It is difficult to estimate the part played by religious teaching in creating this ethical ‘ push, ’ but it is a fact that five out of the first six colleges listed in order of prompt payments are small schools of a semi-denominational character. The sixth is an engineering college.

It is noteworthy that the borrower who has proved to be the best risk is not the product of the great university with high scholastic standing. In the cases studied, at any rate, intellectual attainment, success in the first-rate classroom, has by no means meant a first-rate performance in discharging debt. Apparently students arrive at a state of responsibility in money matters by some moral and emotional route, rather than through the intellect. They do not think their way there; they feel it. This gives force to the foundation’s plea, discussed later in these pages, for definite training in the handling of financial affairs. The need for it seems to be greatest in institutions of high academic rank.

VI

The undergraduate borrower is ‘conditioned’ not merely by his race, his locale, his profession; to a peculiar degree he also reflects in his personal conduct the influence of world events. To this extent his record is an index to the performance of contemporary civilization.

In December 1932, France defaulted her war debt. Remote as this event seems from the field of student loans, an effect was felt almost immediately. Within seven days student borrowers began to write in to say that, if nations could ignore their debts, students were certainly entitled to do the same thing.

During the years of the depression some borrowers showed ‘red’ tendencies. It was not unusual during this period for debtors to write in this vein: ‘The fund from which I borrowed is derived from the spoils of capitalism.

I have come to feel that individuals should not be allowed to amass great sums of money, and I do not recognize any moral obligation to return money into such hands.’

The slight pickup in business was reflected at once by increased payments on loans. Amounts coming in are small, but they are received more frequently. At least 60 per cent of the payments are made in money orders, and much of the balance is in cash. Educated and privileged though they may be, many college graduates to-day are unable to maintain checking accounts at the bank.

VII

These factors go to make up the invisible baggage carried by the boy who comes to the office of the Dean. His people gave it to him just as definitely as they gave him his gray eyes or brown.

He belongs to a penniless but gallant generation. Philanthropists, the foundation assures us, are ready, even anxious, to extend to him the credit which he deserves and needs. But if the colleges expect money to be forthcoming in amounts adequate to meet the need for student loans, they would do well to consider carefully the experience of this foundation. That experience seems to point clearly to certain desirable methods of dealing with students in the field of finance.

The first requisite is that the college give the student some practical training in the realm of personal finance. This may call for a closer scrutiny of the financial habits of the students and the system of credit in a college town. It may imply consultation, and the keeping of accounts. Certainly it ought to predicate a classroom study of the mechanics of finance. And these requirements, the organization believes, should be made not only for students who borrow, but for all undergraduates.

Furthermore, the administrators of this fund urge a far closer association than now exists between the classroom and the real world in which the student will eventually have to make a living. They insist that the boy who borrows must be willing to learn how to repay what he has received. He must, they assure us, acquire the skills and technique of a modern world if he is to do so.

It is fair to assume that one mark of an educated man is that he shall reconsider and reappraise the society about him, and, to some extent, change it. Judged by these standards, few of these student borrowers are educated or mature. They sink back into old prejudices and family habits of thinking as readily as a boy sinks back into the familiar hollows of his easy-chair at home.

The indictment which the foundation makes of the student borrower is this, and it is not made in a crotchety spirit or with money bags in mind: it is not that the borrower, as this organization knows him, does not pay his bills promptly enough, for no one knows better than this father-confessor of youth how difficult it often is to do so; it is rather that he brings to his problems as a debtor childish reactions, racial fixations, techniques of escape, excuses for not facing reality, which his college training should have taught him to scorn. This childishness stands in the way of an honest handling of debt. The foundation therefore hopes to see him reëxamine the standards of his family, his profession, his race.

Philanthropists are prepared to make ‘investments in humanity.’ In a borrower, as in a bond, however, the investor would like some assurance of future maturity.