Student loans have an unusual past rooted in medieval times, Jenny Adams writes for The Conversation.
Adams is an associate professor of English at the University of Massachusetts Amherst researching the history of educational debt.
Student loans, Adams explains, began in the late 11th century with the establishment of higher education institutions in medieval Europe. In 1240, Bishop of Lincoln Robert Grosseteste used Oxford University funds to create the first documented student loan system—a literal chest named St. Frideswide's Chest.
A young man seeking a loan for his education had to be of "modest means" and also have some item of value to deposit into the chest as collateral. While scholars used everything from silver spoons to golden plates, the most common form of collateral was books. But these weren't run-of-the-mill textbooks. The value of books used for collateral was often much greater than the amount of the loan.
However, many scholars did not bother to buy back their collateral once employed. If a scholar did not repay his loan, the chest manager would put the collateral back into the market.
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About 20 more loan chests cropped up in Oxford by the end of the 14th century, often supported by wealthy patrons who wanted to support scholars or have their name associated with a chest. And as time went on, chests increasingly became available to students of all socioeconomic backgrounds, not just those of modest means.
But the arrival of the printing press in the late 15th century spurred the decline of the loan system. The printing press made books so cheap to produce that they were no longer worth offering as collateral. It was also around this time that bankers began to offer loans based on future returns rather than in exchange for property. England legalized interest-bearing loans in 1624, further moving toward a new lending model.
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"True, medieval universities excluded many groups—religious minorities, feudal villeins... and women were barred from entry," Adams writes. "Yet poor young men with talent had a chance. Fees were not high. Patrons helped out. And if one needed money, one might be able to pledge a book – not a future" (Adams, The Conversation, 3/23).
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