Actions that a college might pursue if they have difficulty meeting their financial obligations on dormitory construction loans are discussed by the president of Kansas Wesleyan University. It is noted that when the administration of the loan program was shifted to the new Department of Education (the Department), the agency pushed to collect all monies in default. Based on the experiences of Kansas Wesleyan, it is suggested that colleges should respond as follows: consider the cause of the problem as well as the default itself, seek a reasonable amount of time at the beginning to find a solution, understand the pressures that the Department of Education is facing, seek an experienced outside counsel who has been through the problem, and move as much as possible to separate future planning and separate financing for each dormitory. It is noted that Kansas Wesleyan did not have the cash necessary to pay the default, and that the college was anxious to avoid liquidating endowment assets that were pledged as collateral against the loan. It is recommended that debates over the Department's policy be avoided, and that the Department be asked for suggestions for the college's plan of action. An outline of the college's plan is included. (SW)