Question

Critical Thinking: In the presidential campaign of 2016, two Democratic candidates for President, proposed greater government intervention in higher education that would significantly reduce or eliminate tuition and reduce interest rates on student loan debt. In what ways do the principles of economics relate to this idea? Describe how each relates and what issues we must consider.

Answer 1

The demand for a product or service is defined by several factors, such as the budget for affordability, the sense of income, availability of loans and interest rates.

It should be noted that while evaluating the case as above, this topic is related to the subject of learning as a backbone of modern society.

Every developed country relies on young people to create products or services and thus make it possible for the nation to build and live respectfully.

Over the years, education costs have increased significantly, and private education is more costly than ever. This meant that there is a great need for students to think about factors that affect the importance of these factors for the economy as a whole.

A key case was made in 2016 for reducing tuition fees and the provision of interest rates for student loans. This is rightly linked to the fact that lower interest rates result in increased demand, which underlines the economic factor.

More people tend to demand the same with a decrease in educational costs, as accessibility increases. This results in the same amount of money to buy more goods.

This would have excellent positive results in the event of education, since the total number of students would increase considerably with reduced costs, reflecting the type of people in the country.

Furthermore, loan debts would reduce the impact on students' payment of relatively low interest rates over time and increase their net disposable income after they get a job. Usually because loans are paid when a student gets a job, this also helps manage the expenses of the student following their education.

The theory of demand and supply is the main economic variable indicated here. As the costs of the product sold here decrease, the overall demand may increase.