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The evidence says: all the ETS hackers were FANTOD programmers. What the colleges seem to be assuming is the converse: all FANTOD programmers are hackers. Of course, there is no direct evidence for this converse. Presumably there are some students who learn FANTOD in good faith and who are not hackers
Bunuel isn't this enough grounds to conclude A?

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but because of the assumption the colleges are making, these students are faced with extra challenges, such as having their justly achieved SAT scores disregarded and being forced to take additional admission tests.
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this certainly would not be fun, would not be fair, and could place them at a disadvantage with respect to all the non-programming students who could just take the ordinary SATs and be done with all testing.
Isn't this line of thinking in C a great stretch? Because it clearly makes a LOT of assumptions about this new additional test.

While it is true that students who learn FANTOD would be required to take an additional test, but it nowhere puts them at a disadvantage. We don't know the pass rates or the difficulty levels of this new additional test to conclude that it will put the test takers at a disadvantage.

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You missed one thing here. You said "colleges conclude that most people who learn to program in FANTOD do so to commit some kind of hacking". But only the author can give us the conclusion and not the college.
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Bunuel
In a few recent cases, some teenagers with advanced programming abilities used a new programming language, FANTOD, to hack into ETS and change their own SAT scores. All of the teenagers convicted of this crime were highly skilled in programming FANTOD. In light of these cases, some colleges have discounted the official SAT scores of applicants with a knowledge of FANTOD, and have required them to take special admission tests in supervised conditions on their own campuses.

Which of following conclusions can most properly be drawn from the information above?

A. Most people who learn to program in FANTOD do so to commit some kind of hacking.

B. Colleges should rely on their own admissions tests instead of the SATs

C. Some students with knowledge of FANTOD are possibly placed at a disadvantage in the college admission process.

D. Students who learn FANTOD tend to have much lower SAT scores than do their peers.

E. Some colleges have not set any special requirements for applicants who have demonstrated knowledge of FANTOD

I believe the answer to this should be (A). Here's why:

(A) Perfectly follows. If some cases of hacking by students who had advanced FANTOD skills put a blanket restriction on all students who possess any knowledge of FANTOD, it perfectly follows - colleges conclude that most people who learn to program in FANTOD do so to commit some kind of hacking.

(B) We don't know what's the fraction of students who learn FANTOD and if their fraction is high enough to completely undermine the credibility of SAT scores for all students. Eliminate B.

(C) While it is true that students who learn FANTOD would be required to take an additional test, but it nowhere puts them at a disadvantage. We don't know the pass rates or the difficulty levels of this new additional test to conclude that it will put the test takers at a disadvantage.

(D) Changing one's SAT scores by hacking into the ETS systems (which is the premise of this stem) doesn't necessarily have to involve low SAT scores (compared to the peers) Maybe they (the hackers) scored near perfect scores but wanted to make them peach perfect? Besides it doesn't really tell us anything about all students who learn FANTOD. Eliminate D.

(E) We only know that some colleges have set certain special requirements for applicants who demonstrate knowledge of FANTOD, but it doesn't give us any information about the rest of the colleges so as to conclude that they have not set any special requirements. Eliminate E.
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