Caesar Storlazzi, Yale University Daniel T. Barkowitz, Mass. Institute of Technology

2. International Needs Analysis:Building Towards a Global Consensus Caesar Storlazzi, Yale University Daniel T. Barkowitz, Mass. Institute of Technology Kate Gentile, Amherst College

3. Agenda 1. International Application Materials 2. Global Consensus Methodology 3. Case Studies 4. Limitations and Considerations

4. Caesar Storlazzi 1. International Application Materials

5. 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.

6. 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.

7. 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

8. 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.

9. 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

10. 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.

11. Daniel Barkowitz 2. Global Consensus Methodology

12. 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

13. 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

14. 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

15. 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.)

16. 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 Sample Coefficients

17. 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

19. Kate Gentile 3. Case Studies

20. 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

22. 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

24. 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

26. Case Study 4South Africa • Slightly higher coefficient (.3036) • Slightly above middle income family for South Africa • Home equity capped

28. Case Study 5Romania • 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)

30. Panelists 4. Limitations and Considerations

31. 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 co-efficient countries reaches maximum quickly

32. 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”

33. 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?

34. 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?

35. Questions • Questions / comments / suggestions? • Evaluations • Thanks!