The theory of intertemporal choice tells us that students should be willing to invest in higher education in order to acquire greater future earnings. How can this help economists decide at what level fees should be set? Discuss the limitations of this th

The theory of intertemporal choice is about allocation of resources to present and future use. For example, when one decides to spend money today instead of saving it for a future use, an intertemporal choice has been made; therefore decisions on education choices are inevitably intertemporal.
Intertemporal choices involves comparisons of sums of money at different point of time, and the key to such comparison is the ability to borrow and save (lend) money, in addition the interest rate is the price that drives these comparisons. Until 1998 there were no tuition fees for UK student, however since 1998 there has been an upfront fee of £1,125 irrespective of the subject or university the loans that were taken out was calculated at x percent of the borrower¡¯s subsequent earnings, and are collected alongside income taxes.
If the consumer is a borrower, which is what students would be if they are willing to invest in higher education, then her first period consumption (c1)...