Transcript International Needs Analysis: Towards Building a Global

International Needs
Analysis:
Building Towards a
Global Consensus
Caesar Storlazzi, Yale University
Daniel T. Barkowitz, Mass. Institute of Technology
Kate Gentile, Amherst College
Agenda
1. International Application Materials
2. Global Consensus Methodology
3. Case Studies
4. Limitations and Considerations
Caesar Storlazzi
1. International Application Materials
Application Materials
Financial Information Gathering: Income
and Assets
Institutional Form
CSS International Student Application
Verification of Data Provided
Letters or other documents from employers or
banks
Income tax returns, if such exist.
Basic Information Needed
Name, Place of Birth/Nationality, Place of
Residence, Place of Work
Size of Household, Number in College,
Parents’ Marital Status, Parents’
Occupations
Household Income (Mother, Father, Other
Family Members, RE Holdings, Business
Income, Interest/Dividend, Etc.). Exchange
Rate Used.
Basic Information (cont.)
Family Assets
Home, Other Real Estate
Business Worth/Equity
Savings Accounts, Investments
Jewelry, Art Works (?)
Savings/Investments Held in Other Countries
Student Assets
Savings/Investments in the Student’s Name
Basic Information (cont.)
Family Expenses
For 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 Available
What the family believes they can afford over
the length of the student’s educational period.
Ancillary 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 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 Barkowitz
2. Global Consensus Methodology
Global Consensus: A History
Grew out of 568 Group / Consensus Approach
Desire to streamline various types of
International Needs Analysis:
Spreadsheet Method (flat %ge of Income / Asset)
GDP method
Base Institutional Methodology (IM)
Offer
Survey completed 2006
Pilot proposed 2007
Pilot year completed 2007-08
10 – 15 schools used method in 2007-08
Global 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 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 Coefficient
GDP per Capita (PPP) kept by the CIA as
Part of World Factbook
(http://www.cia.gov/cia/publications/factbook/)
Determine Coefficient
Percentage by Country as Compared to US
Apply Percentage to Fixed Formula Values
(examples: tuition cap, Income bands, Asset
bands, etc.)
Sample Coefficients
Africa
S. Africa
.3036
Zimbabwe
.0479
Botswana .2488
Kenya
.0273
India
.0867
China
.1780
Vietnam
.0707
Nepal
.0342
Turkey
.2077
Philippines
.1141
Guatemala .1141
Colombia
.1963
Mexico
.2242
Czech Rep .5022
Romania
.2077
Russia
.2785
Sweden
.7351
Greece
.5479
Taiwan
.6757S. Korea
Asia
South & Central America
Argentina .3470
Eastern Europe
Bulgaria
.2442
Western & Northern Europe
England
.7260
Italy
.6894
.7602
Hong Kong .8515
Others
Australia
.5593
Global 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 Gentile
3. Case Studies
Case Study 1
Zimbabwe
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 2
Greece
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 3
People’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 4
South Africa
Slightly higher coefficient (.3036)
Slightly above middle income family for
South Africa
Home equity capped
Case Study 5
Romania
Relatively low coefficient (.2077)
Father self-employed, significant increase in 2006
income over previous years
18 year old sibling deferring college entrance for one
year
High income for this country, US equivalent for this
family would be $224,200
Home equity capped
GNA 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)
Panelists
4. Limitations and Considerations
Known Limitations
High income for low co-efficient
Face 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 coefficient countries reaches maximum
quickly
Other 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 Considerations
No 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 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 steps
568 General Adoption?
FASSAC?
Other groups?
Questions
Questions /
comments /
suggestions?
Evaluations
Thanks!