FINALLY, after a two-year gap, students residing in Washington will once again be able to get low-interest student loans from District banks. The banks, members of the D.C. Bankers Association, had stopped making the loans, whose repayment was guaranteed by the District government, because city officials had let the default rate soar astronomically. This week, however, after months of negotiation, city and federal officials pledged to repay the $4 million in defaulted loans within the year, and the banks agreed to resume the loan program as of June 1.

The agreement cuts the District government completely out of the new program - and with good reason. City hall's past performance in this area is hardly one to inspire confidence. Bank officials say about $5 million will be available to city residents. The federal government will, as it does for several states, act as the program's direct sponsor and will guarantee full repayment of the loans. New collection procedures should make it much tougher for delinquents to escape detection for long.

The city government, along with the federal government, still is responsible for collecting on the loans made under the old program. We trust it will fulfill its promise to pursue those collections aggressively. Those who defaulted (and were allowed to get away with it) brought about the program's suspension and closed off a source of educational financial aid for other needy would-be students. It's impossible to collect on the moral debt they owe the city - and their neighbors. But, at least, they can be made to own up to their financial obligations.