Economics class: Student loans — Should the Bank of Mum and Dad step in?

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