Caesar Storlazzi, Yale University

Daniel T. Barkowitz, Mass. Institute of Technology

Kate Gentile, Amherst College

International Needs Analysis:

Building Towards a Global Consensus

AgendaAgenda

1. International Application Materials 1. International Application Materials

2. Global Consensus Methodology2. Global Consensus Methodology

3. Case Studies3. Case Studies

4. Limitations and Considerations4. Limitations and Considerations

Caesar StorlazziCaesar Storlazzi

1. International Application Materials 1. International Application Materials

Application MaterialsApplication Materials

Financial Information Gathering: Income and Assets

Institutional Form

CSS International Student Application

Verification of Data ProvidedLetters or other documents from employers or banks

Income tax returns, if such exist.

Basic Information NeededBasic Information Needed

Name, Place of Birth/Nationality, Place of Residence, Place of WorkSize of Household, Number in College, Parents’ Marital Status, Parents’ OccupationsHousehold Income (Mother, Father, Other Family Members, RE Holdings, Business Income, Interest/Dividend, Etc.). Exchange Rate Used.

Basic Information (cont.)Basic Information (cont.)

Family AssetsHome, Other Real Estate

Business Worth/Equity

Savings Accounts, Investments

Jewelry, Art Works (?)

Savings/Investments Held in Other Countries

Student AssetsSavings/Investments in the Student’s Name

Basic Information (cont.)Basic Information (cont.)

Family ExpensesFor comparison to the adjusted IPA used in the GNA or other calculation.Some family expenses reveal a different cultural norm (servants, dowry, and so on) and such information can be used to perform a case-sensitive review as necessary.

Family Support AvailableWhat the family believes they can afford over the length of the student’s educational period.

Ancillary InformationAncillary Information

Information for Non-custodial Parent

Details regarding Income and Assets of a Business

Exchange Rate Trends for the country/area of the world.

Historical income information/predicted income information to help inform a decision about EFC

Verification of InformationVerification of Information

International Families tend to complete the forms accurately and carefully. However, we need to read all forms carefully in order to ensure accuracy and that all questions were understood. Be suspicious of blanks!

Obtain letters, documentation and income verification (tax returns) in the original, together with a translation into English.

Daniel BarkowitzDaniel Barkowitz

2. Global Consensus Methodology2. Global Consensus Methodology

Global Consensus: A HistoryGlobal Consensus: A History

Grew out of 568 Group / Consensus ApproachDesire to streamline various types of International Needs Analysis:

Spreadsheet Method (flat %ge of Income / Asset)GDP methodBase Institutional Methodology (IM)Offer

Survey completed 2006Pilot proposed 2007Pilot year completed 2007-0810 – 15 schools used method in 2007-08

Global Consensus: A FrameworkGlobal Consensus: A Framework

Uses IM as adjusted by 568 group as a base (reliable / valid / well-known)

Home projection / Home Equity Cap

Allowances for Private School Tuition (with cap)

Concept of Family Assets

Limited to non-US Citizens (regardless of country of residence)

Includes Canada and Mexico

Global Consensus: Comparing CountriesGlobal Consensus: Comparing Countries

“Global Coefficient” used to measure purchasing power parity between countries (US and Home Country)

Consistent Measure Globally

Determined by Dividing Gross Domestic Product by Population

Global CoefficientGlobal Coefficient

GDP per Capita (PPP) kept by the CIA as Part of World Factbook (http://www.cia.gov/cia/publications/factbook/)

Determine CoefficientPercentage by Country as Compared to US

Apply Percentage to Fixed Formula Values (examples: tuition cap, Income bands, Asset bands, etc.)

Sample CoefficientsSample Coefficients

Africa

S. Africa .3036 Zimbabwe .0479 Botswana .2488 Kenya .0273

Asia

India .0867 China .1780 Vietnam .0707 Nepal .0342

Turkey .2077 Philippines .1141

South & Central America

Argentina .3470 Guatemala .1141 Colombia .1963 Mexico .2242

Eastern Europe

Bulgaria .2442 Czech Rep .5022 Romania .2077 Russia .2785

Western & Northern Europe

England .7260 Italy .6894 Sweden .7351 Greece .5479

Others

Australia .7602 Hong Kong .8515 Taiwan .6757S. Korea .5593

Global Consensus ContinuedGlobal Consensus Continued

Taxes paid as reflection of total mandatory contributions (no need for FICA or State taxes)

One-time currency conversion (minimizes currency fluctuation risk)

For 2007-08, used common spreadsheet to analyze cases

Kate GentileKate Gentile

3. Case Studies3. Case Studies

Case Study 1Zimbabwe

Case Study 1Zimbabwe

Very low coefficient (.0479)

2 family members in college

High taxes and mandatory assessments including Aids Levy, pension and medical

Country experiencing hyper-inflation

Case Study 2Greece

Case Study 2Greece

Higher coefficient (.5479)

Other income is from rental property

Significant non-liquid assets. Home-equity capped, other real estate value adjusted under professional judgment (ISFAA does not ask about ORE mortgage, purchase date, price)

Significant sibling secondary educational costs

Case Study 3People’s Republic of China

Case Study 3People’s Republic of China

Relatively low coefficient (.1781)

Fairly typical application for families from People’s Republic of China

High offer relative to income

Case Study 4South AfricaCase Study 4South Africa

Slightly higher coefficient (.3036)

Slightly above middle income family for South Africa

Home equity capped

Case Study 5Romania

Case Study 5Romania

Relatively low coefficient (.2077)Father self-employed, significant increase in 2006 income over previous years18 year old sibling deferring college entrance for one yearHigh income for this country, US equivalent for this family would be $224,200Home equity cappedGNA calculated PC equaled 31% of gross income determined to be too high, adjusted under PJ to $8700 or 19% of gross income (closer to the percentage of income assessed in previous years)

PanelistsPanelists

4. Limitations and Considerations4. Limitations and Considerations

Known LimitationsKnown Limitations

High income for low co-efficientFace validity of $40,000 income with a high EFC (or income %ge)

No measure of difference of local economy within the country

Paris vs. Provence / Madrid vs. Seville

Educational allowance for sibs in low co-efficient countries reaches maximum quickly

Other LimitationsOther Limitations

How to treat foreign colleges (full allowance?)

Using local (US) formula to apply to foreign economies

Home Value Projection?

Asset Conversion Rate?

Tuition limits?

Making sure all mandatory expenses are listed as “taxes”

Other ConsiderationsOther ConsiderationsNo needs analysis system will be accurate in 100% of cases

Professional judgment

Appeals

Where is the “good enough” point?When will we have critical mass (# of schools)?

Have we reached consensus?

Other ConsiderationsOther Considerations

Can the College Board provide a solution?Spreadsheet vs. online international app with GC built in (like the new NCP process)?

If the Board builds it, who will bear the fee?

Next steps568 General Adoption?

FASSAC?

Other groups?

QuestionsQuestions

Questions / comments / suggestions?

Evaluations

Thanks!