Corporation Founded to Aid Mass. Students in Obtaining Bank Loans

A plan to issue a guaranty for 80 per cent on loans made to Massachusetts students by banks in this state went into effect yesterday. The program, set up by the Massachusetts Higher Education Assistance Corporation, will mean that loans will be available at lower rates and for longer periods than would otherwise be possible.

Under the terms of the "Higher Education Loan Plan" ("HELP" loans), student borrowers will sign notes due and payable six months after graduation, but they may receive from the bank an agreement to extend the note as much as three years beyond this date.

The loans will be limited in amount to not more than $500 in any one academic year, and a total of $1,500 in three years. First year students are not eligible for the loans.

HELP loans will bear interest one-half per cent in excess of the "prime rate" in Boston at the time that the loan is made. In Boston at present the "prime rate," that paid by the biggest borrowers with the best credit, is four per cent.

Only students living in Massachusetts will be eligible for HELP loans. They will, however, be able to go to an approved institution in any state.

Other States Interested

The loan project has attracted attention in other states. In New York, a bill to establish a "higher education assistance corporation" has administration approval. Groups in Maine, Rhode Island and Connecticut have expressed interest in seeking similar legislation in these states.

The program is not connected with college loan projects. The University last year lent over $100,000, and M.I.T. more than three times that much. John U. Monro '34, Director of the Financial Aid Office, earlier this year said that such a loan organization would be an important step forward, although it could never replace scholarships, which are for students who cannot afford a loan.