# Student loans

Just IMAGINE...so you got accepted to college. Congratulations! Now that you've run around the house and e-mailed everyone you can think of to tell the good news, it may be time to think about how you'll pay for your higher education. Financial Aid experts recommend that you spend a lot of time cobbling together as many grants and scholarships as possible to pay for your education; it's a rare student who gets a free college education! That means considering the implications of a student loan! In this task you will look at how loans work and some of the mathematics behind them.

## Question 1

But, before looking at loans you are going to explore the data on the cost of an average 4-year degree in the US depending on the type of school chosen - public or private. What's the difference? The main difference is the source of funding; private schools do not receive US government funding so they must rely on tuition fees to support their school. If you want to know more about the differences, THIS link will help! Your first task is to use the data below to estimate the cost of a college education in the US (either public or private), for the year you would graduate at PSI (assuming you stayed in Kiev of course!), and hence potentially start college. Use GeoGebra for any graphing you do and add your end result in the answer box below.

## Question 5

Find similar expressions for the outstanding debt at the end of months 2, 3, 4 and 5. Simplify your expressions!

## Question 6

By consider the expressions you have found so far, i. explain what is happening to the initial value of $500 as the number of months increases. ii. by how much will the initial$500 grow to at the end of the 12 months? iii. describe the series that is generated by the monthly repayment "x". iv. calculate the value of the monthly repayment. v. check your result using the loan calculator above.

## Question 7

In Question 1 you estimated the average debt in your year of graduation for a student who had borrowed money for their college education. Show how to calculate the monthly repayment for this debt assuming a fixed interest rate of 5% and a loan period of; ﻿ ﻿ ﻿ ﻿ ﻿ ﻿ ﻿i. 10 years ﻿ ﻿ ﻿ii. 15 years ﻿ ﻿ ﻿iii. 20 years.

## Question 8

For the academic year 2015-16, the tuition fee at Yale was \$47 600. The year you graduate from school you take a 3-year course at Yale and need to take out a loan to cover 60% of the tuition fees over the duration of the course. If you pay back the cost of your tuition over a 20 year period, with fees adjusted for inflation, with a fixed interest rate of 4.5%, how much will you pay per month?

## Question 9

﻿Finally, having looked at some of the maths behind how loans work and some of the potential costs involved, please consider the following question which is related to the Global Context of Fairness and development. Is access to a higher education fair or not given the increasing financial demands on students...and is it worth it?