Over the past ten years, university students have come under increasing financial pressure. For the previous 40 years, the government paid for all student tuition fees; it also gave a grant to students to cover their living expenses, though this was means tested according to the income of the students’ parents. In the 1990s, the government froze student grants and introduced a system of subsidized student loans to allow students to make up for the falling real value of the grants. In 1998, students for the first time were charged for part of their tuition fees. The amount that they had to pay was set at £1,000. In 1999, maintenance grants were replaced completely by loans. The tuition fee contribution was raised in 2006 to £3,000. The cost of going to university had risen to around £7,000 to the student. Today, in 2015, it is nearer to £25,000.

What might be the opportunity cost of the £25,000 in fees and maintenance:

1. a)  to the parents if they pay them on behalf of their children;
2. b)  to the students if they have to borrow money to pay them?