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# Graduate schools have begun to check whether applicants for

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Senior Manager
Joined: 25 Nov 2006
Posts: 264

Kudos [?]: 38 [1], given: 0

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06 Jul 2008, 08:05
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Graduate schools have begun to check whether applicants for admission are in default on government-guaranteed student loans. Any application submitted by an applicant who fails this test is not processed. Though all applications are tested, it is thought that the 3 percent of the applications that fail represent only three-quarters of the incoming applications from individuals in default. Consequently, approximately 1 percent of the applications that are processed are those of applicants in default who remain undetected.

Which of the following is an assumption in the argument above?

a) Before being processed, the applications from individuals in default on their government-guaranteed student loans are not rejected for other reasons.

b) Applicants in default on their government-guaranteed student loans will not make any loan payments in the future.

c) In all likelihood, more than 3 percent of the applications actually fail the default test.

d) Only a small fraction of the individuals in default on their government-guaranteed student loans apply to graduate school.

e) Individuals in default on their government-guaranteed student loans apply to graduate school in the same numbers in which they do not apply to graduate school.

Took me a while to answer this on the CAT, and guess what I got it wrong!!!....

Kudos [?]: 38 [1], given: 0

Senior Manager
Joined: 19 Apr 2008
Posts: 314

Kudos [?]: 99 [0], given: 0

Re: CR : government-guaranteed student loans [#permalink]

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06 Jul 2008, 09:44
is it A ? I will explain if correct .

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Director
Joined: 26 Jul 2007
Posts: 535

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Schools: Stern, McCombs, Marshall, Wharton
Re: CR : government-guaranteed student loans [#permalink]

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07 Jul 2008, 07:52
I get A as well.

"it is thought that the 3 percent of the applications that fail represent only three-quarters of the incoming applications from individuals in default."

The assumption is that all the applications that fail due so only because of default.

Kudos [?]: 180 [0], given: 0

Manager
Joined: 04 Jun 2008
Posts: 155

Kudos [?]: 84 [0], given: 0

Re: CR : government-guaranteed student loans [#permalink]

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07 Jul 2008, 08:26
I vote for E.

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VP
Joined: 03 Apr 2007
Posts: 1340

Kudos [?]: 834 [0], given: 10

Re: CR : government-guaranteed student loans [#permalink]

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07 Jul 2008, 11:25
Ashwin_Mohan wrote:
Graduate schools have begun to check whether applicants for admission are in default on government-guaranteed student loans. Any application submitted by an applicant who fails this test is not processed. Though all applications are tested, it is thought that the 3 percent of the applications that fail represent only three-quarters of the incoming applications from individuals in default. Consequently, approximately 1 percent of the applications that are processed are those of applicants in default who remain undetected.

Which of the following is an assumption in the argument above?

a) Before being processed, the applications from individuals in default on their government-guaranteed student loans are not rejected for other reasons.

b) Applicants in default on their government-guaranteed student loans will not make any loan payments in the future.

c) In all likelihood, more than 3 percent of the applications actually fail the default test.

d) Only a small fraction of the individuals in default on their government-guaranteed student loans apply to graduate school.

e) Individuals in default on their government-guaranteed student loans apply to graduate school in the same numbers in which they do not apply to graduate school.

Took me a while to answer this on the CAT, and guess what I got it wrong!!!....

Since there were numbers in the answer choices C and D i decided to do some math

Apply – test –process

10000 people in default
1000 such people apply
3%*F = ¾ %*Number of people in default applying to grad school

Number of apps failed = 250
Number of apps processed = 750
1%P = applicants in default who remain undetected
Number of people in default undetected = 75
Number of clean applicants whose applications are processed = 675

c) In all likelihood, more than 3 percent of the applications actually fail the default test.

here its ambigous if the author is talking about all applicants in general or applicants who are in default.

E) is not true from calculations

A is good.

Kudos [?]: 834 [0], given: 10

Senior Manager
Joined: 25 Nov 2006
Posts: 264

Kudos [?]: 38 [0], given: 0

Re: CR : government-guaranteed student loans [#permalink]

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14 Jul 2008, 13:56
OA is A

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Re: CR : government-guaranteed student loans   [#permalink] 14 Jul 2008, 13:56
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