Economics class: Student loans — Should the Bank of Mum and Dad step in?
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.
Specification:
Asymmetric information
Click to read the article below and then answer the questions:
Student loans: Should the Bank of Mum and Dad step in?
Explain how the student loan repayment threshold is changing from 2022-2023
Consider a graduate who earns £40,000 for forty years. Under the proposed new system, how much would they repay each year if:
i) their student loans totalled £50,000; ii) £250,000; or iii) £1,000,000?
Consider a graduate who earns £20,000 for forty years. Under both the old and new systems, how much would they repay each year?
Explain the asymmetry of information associated with student loans and the commendable urge to clear debt
Gavin Clarke, Emmanuel College
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