Texts: Student loan debt is an emerging social problem for the current generation of young adults. Some data suggest that among those with debt, outstanding student loan debt in 2010 was around $25,000. Scholars have suggested that for-profit institutions (e.g. DeVry; ITT-Tech) are key contributors to rising student loan debt, as they tend to be far more expensive than non-profit institutions, offer less aid, and their graduates do not fare as well in the labor market as graduates of non-profit institutions. Your goal in this exercise is to test this hypothesis. To do so, you draw a random sample of 4,000 college graduates in the United States. After collecting your data, you find that students who graduated from for-profit institutions (N=2,200) reported, on average, $45,000 in outstanding student loan debt (SD=$12,000). By contrast, graduates from non-profit institutions (N=1,800) reported an average of $12,000 in outstanding student loan debt (SD=$3,000). Complete the questions below and come to a conclusion about the association between institution type and student loan debt. Use an alpha of .05 for your hypothesis test.
What type of hypothesis test (test statistic) will you use and why?
Is this a one- or two-tailed test? Why?
Formally state your hypotheses (remember there are always two hypotheses) that you will test. State your hypotheses in words as well.
What is the critical value of the test statistic?
What is the obtained value of the test statistic?
What is your decision about the null hypothesis? Please provide an interpretation of your results.