What opportunity costs do students face when deciding how to pay for college?Should they avoid loans by skipping college altogether or by working their waythrough college?
What
Should they avoid loans by skipping college altogether or by working their way
through college?
The opportunity cost is a concept which measures the value of the next best alternative forgone by an individual in favor of performing a particular economic activity. The opportunity cost is an example of implicit cost.
When a student decides to get admission into the college and pay the academic fee, then the opportunity cost of deciding in favor of this decision is the economic surplus that the student could have enjoyed if he had invested that time and money in some other activity. The opportunity cost of joining a college is the activity that the student could have performed, like getting a job and the additional income foregone from investing that money in other sources instead of paying the university's academic fee.
Although due to the Rising complexities and requirement of highly skilled workers in the labor market, getting a college degree is generally essential and necessary to lead a life with a better standard of living in the future. Hence the decision of getting admission into a university or accepting the college altogether is based on the factors like personal preferences, future Expectations regarding the labor market, and socio-economic constraints faced by the student.
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