Tuition Grant Program (TGP)

1. Tuition Grant Program (TGP) Overview of Program February, 2009

2. TGP Overview Table of Contents • Program Explanation Pages 3-10 • TGP Description • Annual Process • Annual Benefit • Annual Benefit Examples • Expenses Not Covered • Length of Payments • Eligibility Pages 11-18 • Eligible Employees • Breaks in Service • Eligible Institutions • Eligible Children • Child’s College/University Attendance • Additional Factors Pages 19-25 • Taxability • Financial Aid • How and When to Apply Pages 26-28 • For More Information Page 29-30 TGP Overview: February 2009

3. Program Explanation TGP Overview: February 2009

4. TGP Description • Stanford’s Tuition Grant Program assists employees by helping to pay for their dependentchildren's undergraduate college education • TGP provides tax-exempt payments directly to accredited colleges and universities toward the cost of the child(ren)’s tuition • Please see comprehensive program guidelines, Frequently Asked Questions, and download the application form at: http://hreap.stanford.edu • The maximum benefit is the lesser of: • The cost of tuition (or fees) for your child’s school, less any applicable grants or scholarships or • Up to one-half of Stanford University’s tuition (Half of the current (2009/2010) Stanford tuition is $18,690.00) • The benefit payable on your behalf will be calculated each semester, quarter, or each time you apply for TGP benefits and seek an authorization letter TGP Overview: February 2009

5. TGP Description(cont’d) • The maximum full-time benefit for the 2009-2010 academic year – including summer term – is: $ 18,690 for the full academic year $ 9,345 for each semester $ 6,230 for each quarter • Payments are only made for the current academic year after an application has been submitted and approved. You may not apply for benefits retroactively. TGP Overview: February 2009

6. Annual TGP Process TGP Overview: February 2009

7. Annual Benefit • TGP will pay some or all of the actual tuition (or required fees instead of tuition, such as orientation, registration, or application fees) charged by an eligible educational institution to matriculated students. • The amount TGP will pay is based on: • the percent of full-time equivalency (FTE) of the eligible employee’s appointment; e.g., 100%, 85%, 72%, 50% • If you work between 50% and 99% FTE at the time of payment, your benefit will be pro-rated by the percent of your FTE. This is referred to as the “part-time benefit.” • the amount of half of the current Stanford University undergraduate tuition (half of the current 2009/2010 Stanford tuition is $18,690) This amount changes every academic year • the amount of tuition, less any applicable grants or scholarships, your child is being charged by the college or university he/she/they are attending • If the child’s institution invoices more than the maximum benefit, TGP will pay up to the maximum amount* • If the child’s institution invoices less than the maximum benefit, TGP will pay up to the full amount of the invoice* *Based on full time eligible employee; prorated if not full time See the next page for examples of the TGP annual benefit TGP Overview: February 2009

8. TGP Annual Benefit Examples *Annual benefit up to ½ of Stanford’s current tuition rate, based on employee’s FTE and the maximum allowable per semester or quarter. The above scenarios have tuition rates that differ from Stanford’s current tuition rate ($18,690 for 2009/2010). TGP Overview: February 2009

9. Excluded Expenses TGP is to be used toward tuition and required fees. Some examples of expenses that are not covered* are: • Room and board • Books and course materials • Laboratory fees • Expenses at any United States or foreign institution that are not normally included in the basic tuition and fees by Stanford University, the University of California, or the California State Universities *See the comprehensive TGP guidelines for a complete listing of expenses not covered by the TGP benefit TGP Overview: February 2009

10. Length of Payments • The Program will make payments toward up to four years of work required for a baccalaureate degree at the eligible institution attended by the eligible child • Benefits will be paid for a maximum of: • 12 quarters or 8 semesters of eligible attendance • If any TPG benefits for a child are taxable, benefits for that child will not be paid toward more than 12 quarters or 8 semesters of eligible attendance or after a period of 4 consecutive years, whichever is less. • Benefits for extended part-time attendance may not exceed the amount that would be paid for full-time attendance in a four-year period, or the covered portion of such period. • No TGP benefits continue beyond your eligible child’s attainment of the baccalaureate degree. TGP Overview: February 2009

11. Eligibility for TGP TGP Overview: February 2009

12. Eligibility—Employees • To participate in the TGP: • For Staff: A benefits-eligible University position that is six months or more (four months or more, or to the extent provided in the collective bargaining agreement for bargaining unit employees) and 50% FTE or greater. • In addition to your eligibility, you must have completed five years of continuing benefits-eligible service in order to receive TGP benefits. • For Faculty and Senior Administrative Staff: A University appointment of six months or longer [1] • Faculty and senior administrative staff are eligible for TGP when your appointment begins • If both parents of an eligible child are Stanford employees, only one four-year benefit period is allowed for each eligible child regardless of which parent applies. The same limits and conditions apply as if Stanford employed only one parent • Employees of organizations affiliated with the University are not eligible for benefits under this Program, such as Carnegie Mellon • [1] Effective January 1, 2004, faculty of the School of Medicine who have a 7/8 or more assignment at the Palo Alto Veterans Administration Medical Center will be treated as benefits-eligible for this purpose. TGP Overview: February 2009

13. Eligibility—Breaks in Service TGP Overview: February 2009

14. Eligibility—Breaks in Service (cont’d) TGP Overview: February 2009

15. Eligibility—Institutions Accredited U.S. Institutions • TGP payments will be made to accredited United States colleges and universities listed in the most current edition of “Accredited Institutions of Postsecondary Education” published by the American Council on Education (ACE). • The Benefits office has a copy of this book for your reference. • If an institution is not listed in the ACE publication, the parent must provide documentation that the units from the institution are transferable to Stanford University. Send the documentation to the TGP Administrator so the institution’s eligibility can be determined. Foreign Institutions • TGP payments may be made to foreign colleges and universities if Stanford University determines, at its discretion, that the foreign institution’s academic standards are equivalent to those of accredited United States institutions. For an explanation on how payments are made to foreign institutions, please see the TGP guidelines posted on hreap.stanford.edu TGP Overview: February 2009

16. Eligibility—Children A child is considered eligible if he/she meets both of the following requirements: The child is: • A biological or legally adopted child, OR • A stepchild who has lived with you for at least 12 months immediately before you request benefits under the Program, OR • A foster child who has lived with you for at least 24 months immediately before you request benefits under the Program, OR • A child of your domestic partner (as defined by the Domestic Partner Benefits Policy, available through Benefits) who has lived with you for at least the 12 months immediately before you request benefits under the Program, OR • Your ward under a court-approved legal guardianship and has been your ward for at least 60 months and One or more of the following statements are true: • The child is claimed as your dependent on your federal income tax returns, OR • Your child provides less than 50% of their financial support, OR • The child lives primarily with you when he/she is not away at school. TGP Overview: February 2009

17. Eligibility—Children(cont’d) • You must advise the TGP office immediately if your eligible child in the Program withdraws from college during an academic year, transfers to another college, or is no longer eligible. You are also responsible for advising the TGP office if your employment status changes during the period covered by the approved application. • If you or your child becomes ineligible for the Program, Stanford reserves the right to recover from you the Program benefits it paid on your behalf. • If your child withdraws before earning any units, and the child’s institution refunds to Stanford the entire amount of tuition paid by Stanford, the student loses no eligibility. • If the institution refunds more than half, but less than all, of the amount to Stanford, the child loses one half of a quarter or semester. If the institution refunds half or less than half of the amount, the child loses a full quarter or semester of eligibility. You may issue a check made payable to Stanford University for the amount not refunded by the child’s institution. TGP Overview: February 2009

18. Child’s College/University Attendance Full-time Summer Attendance • If your eligible child attends summer session and the Program pays for summer attendance, a term of eligibility will be deducted from your remaining eligibility. Part-time Attendance (Including Part-time Summer Attendance) • If your eligible child takes eight or fewer units in a term, then the TGP will pay only half of the equivalent full-time academic term of eligibility. The amount payable to the institution cannot exceed one half of the amount available for that term, or the balance of the annual benefit amount available. Inter-term • If your eligible child enrolls in an “inter-term” in between semesters, TGP will pay the tuition as long as the course does not exceed the total maximum semester amount for the year. The student loses no additional eligibility. • If the max semester amount has been used, a term of eligibility may be deducted from remaining eligibility. An inter-term payment may deplete the remaining annual benefit amount available. Simultaneous Attendance • If your eligible child attends and is charged tuition by two eligible educational institutions at the same time for the same course of study, TGP will pay benefits up to the amount that would have been provided for the student to attend the primary institution full-time. This amount will be adjusted if the combined attendance at both institutions is less than full time. TGP Overview: February 2009

19. Additional Factors TGP Overview: February 2009

20. Taxability Issues Non Taxable Benefit • In order for TGP payments to be tax exempt, your child must meet the following criteria: • The child is claimed as your dependent on your federal income taxes for the year that includes the tuition payment date. • Payments made on behalf of your eligible child(ren)* are made directly to the college or university and are excluded from your gross income for federal income tax purposes and are thus tax-exempt. • Please consult a tax advisor to get specific guidance regarding taxes and TGP payments *Please review the comprehensive TGP Guidelines for who is considered an eligible child: http://hreap.stanford.edu TGP Overview: February 2009

21. Taxability Issues (cont’d) Taxable Payments • In general, if the child is not claimed as your dependent on your federal income taxes, the benefit payments do not qualify for tax-exempt treatment and are subject to a time limitation. • In this case, you make tuition payments directly to the child’s institution. • After your application is reviewed and approved, you will be issued a letter outlining the reimbursement procedures, taxable compensation, and maximum duration of the TGP benefit. • Next, when you receive the invoice from your child’s institution, you are responsible to pay it. • Next, provide a copy of the invoice and proof of your tuition payment to the Educational Assistance Programs office in Human Resources. • Payments to the institution must be made by the employee receiving the TGP benefits. • Reimbursements for current employees will be processed within two pay periods on either the 7th or 22nd of the month, depending on the receipt date for proof of payment. Reimbursements for official retirees will be sent to your home address approximately 15 days after receipt of proof of payment. • That reimbursement will be classified as taxable supplemental compensation subject to withholding. The University will not help pay any taxes due on such compensation. • Also, this supplemental compensation will not change your base salary; such other benefits will continue to be calculated on your regular salary. The following examples describe three situations in which questions could arise about the taxability of the Program funds. • See Taxability Examples on the next page NOTE: There are other circumstances that could result in benefits being treated as taxable compensation. We strongly encourage you to consult your tax advisor concerning your specific situation. TGP Overview: February 2009

22. Taxability Issues (cont’d) Examples • If tuitionpayments are made on behalf of a child of your domestic partner and you have not legally adopted the child, the Program benefits will be treated as taxable compensation to you. • If the child provides over 50% of his or her own financial support, tuition payments made on behalf of the child will be treated as taxable compensation to you. • If the child has attained age 24 (19 if not a full-time student) and has gross income equal to or exceeding the federal income tax exemption amount, and is not disabled, the child will not qualify as a dependent and Program benefits will be treated as taxable compensation to you. TGP Overview: February 2009

23. Taxable Benefit Duration • The Program will reimburse the employee for tuition payments toward up to four years of work required for a baccalaureate degree at the eligible institution attended by the eligible child. New Rule based on IRS code 409A: Taxable TGP benefits for a child will not be paid toward more than 12 quarters or 8 semesters of eligible attendance or after a period of 4 consecutive years, whichever is less. Taxable TGP benefits must be taken in consecutive years. The consecutive duration begins at the start of the first term for which any taxable TGP benefit is paid and continues through the consecutive time equivalent of the remaining TGP credits. No TGP benefits continue beyond your eligible child’s attainment of the baccalaureate degree. *see examples of how this new rule applies in the TGP guidelines available at hreap.stanford.edu TGP Overview: February 2009

24. Other Non-Taxable Payments Example: Late TGP Application Causes Employee to make Tuition Payment Directly to Child’s Institution • If you must make a payment for tuition directly to the child’s institution due to a late TGP application submission, the TGP Administrator will issue a reimbursement check to the school. • Once you have made the tuition payment, you must provide an invoice to show the tuition amount and proof of payment. If the tuition was paid by check, the front and back copies of the check are required. • Upon receipt of payment from the Tuition Grant Program, the child’s school will in turn issue the reimbursement check. • Note: Stanford University is not responsible for the length of time it takes the child’s school to reimburse you after they have received Stanford’s payment. If the child is over the age of 18, the child’s school typically reimburses the child directly. TGP Overview: February 2009

25. Financial Aid • Participation in Tuition Grant Program could affect other financial aid benefits for your child’s education. Contact your child’s Financial Aid Office for more information. • For Stanford University students, Educational Assistance Programs (EAP) notifies the Financial Aid Office and you after the application is processed. When registering, the student receives the applicable credit toward Stanford’s tuition through the process specified in the University’s registration procedures. TGP Overview: February 2009

26. How and When to Apply

27. How to Apply • To apply for the TGP, complete and submit an application between April 1-July 1 on behalf of your eligible child for each partial or entire academic year the child attends (includes summer session), or for each change of school. • Application forms are available at the campus Benefits Office, the SLAC Benefits Office, or on the HR EAP web site. Go to: http://hreap.stanford.edu TGP Overview: February 2009

28. When to Apply • As soon as you know the college or university the child will attend, complete and submit the application to the Educational Assistance Programs Office in Human Resources. Applications are accepted during the academic year, but are due no later than July 1. • To ensure timely payments to your child’s school, you must submit applications between April 1 and July 1 for the upcoming academic year. Failure to do so may result in a required deposit, administrative delays, and a direct payment from you to the institution. If payment is made by you, you may experience a delay in reimbursement after the institution receives the TGP payment. • Faculty and staff located at SLAC should submit applications directly to the SLAC Benefits Office. SLAC Benefits Office 2575 Sand Hill Road, Mail Bin 11 Menlo Park, CA 94028 Apply every academic year • For all semesters or quarters (includes summer session)–apply between April 1 and July 1 TGP Overview: February 2009

29. For More Information

30. For More Information • Review the complete program guidelines and Frequently Asked Questions online, and download the application form on the Human Resources Educational Assistance Programs web site: http://hreap.stanford.edu • Call: (650) 736-2985 (local) or (877) 905-2985 (toll-free) • TGP is currently option 5 on the menu • If you are unable to print the TGP application form that is online, you can pick up a form in the Benefits office located at: • 320 Panama Street, Bambi Modular Lobby • Note: If you are a SLAC employee, use the same forms, but submit them to your own HR office at Mail Bin 11. TGP Overview: February 2009