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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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