# The Loan Shark

We’ve just added a new feature to the latest version of our economics simulation game Cupcake: the loan shark.
Loans and debt are a significant economic and life-skill issue worth discussing with your students: the average U.S. household has \$15K in Credit card debt, \$27K in Auto loans, and \$49K in student loans! Our goal was to familiarize students with the concept of loans, and the concept that there are good and bad loans. (We decided that compound interest would be too challenging for many younger elementary students; we may introduce that in a later version.)

Players have the option to get a loan early in the Cupcake selling season to help them buy more ingredients or upgrades, and pay it back over time. Because Cupcake already includes many math concepts, the loan doesn’t appear the first time a student plays. When it does appear in the Ovens & More shop (boy – we really took liberties with the “& More“, huh?), players have a choice whether to take the loan shark’s deal or not. The first thing to notice is that a player is going to have to do some math just to understand the terms of the deal (the proverbial fine print). For example, a “Loan of \$100: for the next 10 days, pay \$10.”

We decided on some initial categories of loans with the following thoughts in mind:

• The “Family Loan”. For example, (\$100, 10, \$10).  I’ve gotten a few of these from my grandma: no interest with a reasonable pay schedule. If a player is lucky enough to end up with this loan, we hope they’ll take it.
• A loan with modest interest, for example, (\$100, 10, \$11). Sure, this may seem like a lot given current interest rates, but it’s still a good deal.
• A bad loan, for example, (\$200, 15, \$25). We don’t want kids to blindly accept loans thinking that money now is always worth it. We think this can also make a good discussion topic for the classroom: what defines a “bad loan”?

We’d like feedback from teachers: What would you like to see in the loan options? Do students understand why paying a bit for money upfront may be worth it?  Do you think the round numbers are better for a conversation in your classroom, or the ones with more challenging math?