Student Financial Binds Eased By Honor Loans

The Ivey F. Lewis Honor Loan Endowment is a stand-alone fund established to aid full-time University students in meeting their small, short-term financial needs by issuing interest-free loans for a maximum of $600. The Honor Loan program began in 1939 and is completely student run. To qualify for the Honor Loan, students must simply be enrolled as full-time undergraduate or graduate students and must be in good standing with the University.

This school year, I am privileged enough to be the Ivey F. Lewis Loan Officer. I hold ten office hours a week in the Office of the Dean of Students and meet with graduate and undergraduate students in need of emergency aid. My job is to analyze the financial situation of students and ensure that they meet the loan criteria. The University allocates about $100,000 for this fund. Because the loans are interest fee, the University does not make any profit from issuing these loans. The fund is simply there to be used as a “public good” for all University of Virginia students. It is not a purely public good because the only students who have access to this fund are University of Virginia students. The theory of clubs would apply when classifying this loan fund as a good because exclusion is possible. Something along the lines of federal student aid through the U.S. Department of Education would be a better example of a purely public good because all US citizens are open to apply for that type of aid, but as Buchanan stated in his Economic Theory of Clubs, “The range of ‘publicness’ is infinite.” This loan fund also has a characteristics of a public good in that it is non-rivalrous.

The Cavalier Daily published an article dated March 20, 1969 about the loan fund, which was then located in the Rotunda. The maximum loan value then was $25 and the value now is $600. Even taking inflation into account inflation, the amount of money available to students has greatly increased, and the money the fund has available has increased as well. The loan fund has enough money to meet the student demand for loans, and has many positive externalities, with little or no negative externalities. Negative externalities would occur if a student did not pay back the loan in the time-frame agreed upon, but that is expected to happen a few times. Overall it is a great program. So if you are a full-time student in need of emergency aid, come to the Office of the Dean of Students and take advantage of this good that is available to you.