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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.

- 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?

**a.**

To determine

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

**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:

**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.

STATISTICS F/BUSINESS+ECONOMICS-TEXT

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