Tuck Loan Corporation

In a form that would seem especially appropriate for Tuck School, a new type of loan program for M.B.A. candidates at the business school has been established with the creation of the Tuck Educational Loan Corporation. The students themselves helped to devise it.

The new approach, under which students may borrow up to the total cost of their M.B.A. education, was devised when it was clear that student needs for financial help would soon reach the limits of the school's sources of scholarship and loan funds. In 1 971 -72, Tuck School scholarships and loans amounted to nearly one-third of a million dollars, or close to six times the $54,000 total awarded only a decade earlier. There are nearly 250 M.B.A. candidates of whom over 50 percent require financial assistance.

To supplement its own insufficient loan funds, Tuck School in recent years has turned to bank borrowing for which the College provided collateral. But by 1971, with nearly $400,000 of the College's short-term securities tied up as collateral, it became clear that a new program was needed.

The corporation's initial equity of $152,000 was contributed anonymously by a Tuck alumnus and will be enlarged by additional gifts or by investment of a portion of endowment funds. The equity capital is leveraged through borrowing from commercial banks against short-term notes. The total amount needed for loans this year is expected to be $250,000.

A Tuck student may borrow up to $12,000 over the two years of the M.B.A. program, provided total indebtedness (including undergraduate loans) does not exceed $15,000 at the end of his second year. Repayment will begin within 90 days of graduation in varying schedules depending upon the size of the indebtedness and the anticipated rise in the borrower's earning power. Interest on the outstanding balance will equal the average effective cost of the bank borrowing, calculated monthly, plus three-fourths of one percent per year for contingency allowances and life insurance costs. Periods of repayment would normally range from three years for indebtedness of $2000 to ten years for a debt of $9,000 to $12,000. Last year the average starting salary of Tuck graduates was $14,400.