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variable closely reflects TAMU’s coursework requirements for admission to the University; the main difference is that TAMU requires 3.5 credits of mathematics, instead of three credits.

There is virtually no difference in the default rates of borrowers who met the minimum high school coursework requirements and those who did not meet the standards. In fact, there is not a statistically significant relationship between the composite coursework variable and default.

6,131

95.6

282

4.4

6,413

4,852

95.5

228

4.5

5,080

1,193

93.0

90

7.0

1,283

12,176

95.3

600

4.7

12,776

Of interest is the fact that the ‘Missing’ category has a 7.0 percent default rate. A closer look indicates that this group of borrowers is dominated by transfer students and students who continue on to graduate school – ironically, two categories that this study shows have lower than average default rates. Further research will be needed for evaluating whether there are subgroups within otherwise low risk categories of borrowers that have risk profiles that are strikingly different from their cohorts.

Recommended High School Program

No Yes Missing All Undergraduates

Total

% of

% of

row

N

row

N

No

Default

Yes

Father

Significant

0.01

0.07

-0.09

-0.02

Parental Marital Status

Significant

0.01

0.06

N/A

N/A

47

Demographic Variables

Statistical Significance

Uncertainty Coefficient

Cramer s V

Gamma -0.16 N/A

Spearman Correlation

Significant Significant

0.04 0.02

0.14 0.09

-0.04 N/A

In general, the variables in the demographic section have weak relationships to default. In fact, six of the variables do not have a statistically significant association to default. Based upon the Uncertainty Coefficient and Cramer’s V, Age of Borrower is the only variable in this section that has more than a trivial strength of association to default.

0.01

0.06

-0.12

-0.03

0.01

0.05

0.01

0.00

0.00

0.03

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Gender of Borrower Highest Level Attained by Mother

Family Size Citizenship of Borrower Country of Local Address

State of Local Address

Significant

Significant Significant Significant Not significant

Not significant

Statistical Summary: Demographic Variables

Variable Age of Borrower

Ethnicity of Borrower Highest Level Attained by

0.01

N/A

0.06

N/A

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