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The Institute for Higher Education Policy, a Washington, D.C.-based research firm, studied the payback of student loans for 1.8 million college students who had student loans that began to become due six years ago ( The Wall Street Journal , November 27, 2012). The study found that 50% of the student loans were being paid back in a satisfactory fashion, whereas 50% of the student loans were delinquent. The following joint probability table shows the probabilities of the student loan status and whether or not the student had received a college degree. a. What is the probability that a student with a student loan had received a college degree? b. What is the probability that a student with a student loan had not received a college degree? c. Given the student had received a college degree, what is the probability that the student has a delinquent loan? d. Given the student had not received a college degree, what is the probability that the student has a delinquent loan? e. What is the impact of dropping out of college without a degree for students who have a student loan?

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STATISTICS F/BUSINESS+ECONOMICS-TE...

13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884

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STATISTICS F/BUSINESS+ECONOMICS-TE...

13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884
Chapter 4.4, Problem 38E
Textbook Problem
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The Institute for Higher Education Policy, a Washington, D.C.-based research firm, studied the payback of student loans for 1.8 million college students who had student loans that began to become due six years ago (The Wall Street Journal, November 27, 2012). The study found that 50% of the student loans were being paid back in a satisfactory fashion, whereas 50% of the student loans were delinquent. The following joint probability table shows the probabilities of the student loan status and whether or not the student had received a college degree.

Chapter 4.4, Problem 38E, The Institute for Higher Education Policy, a Washington, D.C.-based research firm, studied the

  1. a. What is the probability that a student with a student loan had received a college degree?
  2. b. What is the probability that a student with a student loan had not received a college degree?
  3. c. Given the student had received a college degree, what is the probability that the student has a delinquent loan?
  4. d. Given the student had not received a college degree, what is the probability that the student has a delinquent loan?
  5. e. What is the impact of dropping out of college without a degree for students who have a student loan?

a.

To determine

Compute the probability that student with a student loan had receive a college degree.

Explanation of Solution

Calculation:

The study found that 50% of the student loan is being paid back in a satisfactory fashion, whereas 50% of the student loans were delinquent. The table provide the joint probability of the student loan status and whether or not the student had received a college degree.

Define the events:

Y= selected student has a college degreeN=selected student does not have

b.

To determine

Compute the probability that student with a student loan had not receive a college degree.

c.

To determine

Compute the probability that student has a delinquent loan given that student had received a college degree.

d.

To determine

Compute the probability that student has a delinquent loan given that student had not received a college degree.

e.

To determine

Explain the impact of dropping out of college without a degree for students who have a student loan.

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Chapter 4 Solutions

STATISTICS F/BUSINESS+ECONOMICS-TEXT
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