... money against his life income, as his first-period consumption is greater than his first-period income: c1> m1 The money which has been borrowed has to be paid back with interest, we will call interest r. From this the following budget constraint of the student can be derived for period 2 (C2), in the future: C2 = m2 - r (c1 - m1) - (c1 - m1) = m2 + (1 + r) (m1 - c1) (Varian) As can be seen from this constraint if consumption is high in this period and income is low, (m1 - c1), a student has to borrow money off his future consumption in period 2, future income will have to be invested to pay off this debt: It seems that students shouldn't go to university as they ...

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