STAT 30100: Elementary Statistical Methods I

Department of Mathematical Sciences

Purdue School of Science, IUPUI

Project # 3
Fall 2016, Total 25 points
Due Date: 11/20/2016

Name:________________________________________________________

Important Instructions:
Provide complete and clear explanations to all questions. Graphs must be labeled for clear communication.
(Remember the importance of context throughout!) Your project must be typed, easy to read and have the
answer to each question identified by question number. Copy and paste the specified StatCrunch output, including
graphs and number summaries, into the specified table. The indicated StatCrunch output MUST appear with the
discussion, not as separate pages. Also, consider at least three decimals for your calculation throughout the
project.

Problem # 1
It has been claimed that students are graduating from college with a record high level of student loan debt. If we
wanted to randomly select a certain number of colleges/universities to approximate the average debt within $100
at a 95% confidence level assuming that the standard deviation is $3,900, how many should we include in our
sample?

(a.) Calculate the sample size.

[2 pts]

Now we will explore the following questions or ideas.

(b.) Open your file College Scorecard Data in StatCrunch. Calculate the sample size for the
variable GRAD_DEBT_MDN_SUPP. Paste the StatCrunch output below. [1 pt]

[-> Choose STAT on the STATCRUNCH

-> Choose Summary Stats
-> Choose the variable name under Select Column(s)
-> Keep only on the right side for summary statistics you include n
->Compute

(c.) This variable represents the median debt upon graduation for the sample of colleges and
universities. Is the sample size of this sample larger than what we calculated in part a? Given
your yes/no answer, explain how reliable you think the confidence interval calculated form this
dataset would be.
[ 2 pts]
(d.) Now use StatCrunch to calculate the 95% confidence interval for the debt rate upon graduating.
Paste your output below and then give a sentence explaining the confidence interval in terms of
the problem.
[ 2 pts]

[-> Choose STAT on the STATCRUNCH

-> Choose T Stats -> One Sample -> With Data
-> Choose the variable name under Select Column(s)
-> Select Confidence interval for
-> Select Histogram with mean marker
->Compute

(e.) It has been claimed that students are graduating with around $37,000 in student loan debt.
Perform a hypothesis test on our dataset to see if the average is significantly different from this
claim. Paste your output below and answer the subsequent questions.
[ 1 pt]

[-> Choose STAT on the STATCRUNCH

-> Choose T Stats -> One Sample -> With Data
-> Choose the variable name under Select Column(s)
-> Select Hypothesis Test for
-> Enter 37000 in the box next to =
->Compute

(f.) What is the sample mean debt upon graduation from our sample?

[ 1 pt]

(g.) What is the population parameter of interest?

[ 1 pt]

(h.)What test have we performed? And have the assumptions of the test been satisfied? (Use all of
your StatCrunch output to assess the assumptions)
[ 3 pts]
(i.) Write the hypotheses.

[ 2 pts]

(j.) What is the rejection region if we are using an =0.05?

[ 1 pt]

(k.)Draw your conclusion to your hypothesis test, and explain what it means in terms of the context
of the problem.
[ 2 pts]

Problem #2
In the next section, we are going to assess whether the graduates will have the ability to pay back
their loans based on their average salary 10 years after they enter college. It is recommended that if you
devote 10% of your income to student debt you can pay it off in 10 years. Lets test this claim. Use the
variable MD_EARN_WNE_P10 from the dataset to assess this.
(a.) Use StatCrunch to approximate with 99% confidence, the average salary 10 years after
entering college. (Paste your output below) Interpret this confidence interval in terms of the
problem.
[ 2 pts]

(b.) Is this approximation more than enough so that one could put away 10% and pay back their
loans in 10 years?
[ 2 pts]

(c.) Give your opinion using the evidence shown whether the news is giving an accurate
portrayal of student loan debt based on the data that we have collected.
[ 2 pts]