New York University is one of the most “liberal” law schools in the country. How
ID: 2495771 • Letter: N
Question
New York University is one of the most “liberal” law schools in the country. However, in spite of the political leanings of the faculty and the students, the vast majority of its law graduates enter lucrative large firm law practices, not public interest work. To encourage students to enter public interest careers, the law school is considering two policies – a loan forgiveness program if students go into public interest careers or a scholarship program for people who say they want to go into public interest law (they would have to pay back the scholarship if they do not go in to public interest law). Suppose the two programs could be established in a way that the present value of the benefit to students going into public interest law was the same if the rate at which individuals could borrow money at was 10 percent. Do you think students would prefer one or the other option? Would all students have the same preferences? Why?
Explanation / Answer
Yes, I think different students would prefer different options as they have differents preferences or utilitiesfor the same options
No, all students would not have same preferences as students have different risk preferences so, some students could be risk averse , so they will select acholarship now then loan forgiveness ,While for a risk neutral students , both the situations will have same utility , so his preference will be indifferent between the two options and the risk lover students will prefer loan forgiveness than have scholarship now.