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Constructing Graduate Student Budgets Darrell Nabers Graduate and Professional Issues Committee Chair, ILASFAA Analyst, University of Chicago-Pritzker School of Medicine

Constructing Graduate Student Budgets

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Constructing Graduate Student Budgets. Darrell Nabers Graduate and Professional Issues Committee Chair, ILASFAA Analyst, University of Chicago-Pritzker School of Medicine. Overview of Presentation…. What is a student budget? How does federal law affect the construction of a student budget? - PowerPoint PPT Presentation

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Page 1: Constructing Graduate Student Budgets

Constructing Graduate Student Budgets

Darrell NabersGraduate and Professional Issues

Committee Chair, ILASFAA

Analyst, University of Chicago-Pritzker School of Medicine

Page 2: Constructing Graduate Student Budgets

Overview of Presentation… What is a student budget? How does federal law affect the construction

of a student budget? What institutional variables ‘drive’ student

budgets? Review of common budget items Tips to determine the most accurate COA for

students Beyond COA: what are the options?

Page 3: Constructing Graduate Student Budgets

What is a Student Budget?

Defined as-the total of the educational costs for a student

Why do students and FA officers often differ on the application of this definition?

Reality is:COA=Cost of Attendance=Anticipated or

Estimated Student Budget

Page 4: Constructing Graduate Student Budgets

What (some) Students Think…

FAO is budgeting for THEIR individualized expenses

FAO is responsible for budgeting items they claim are for the benefit of their education, or have been used for their education:

• IE, loan costs from undergraduate study, credit card bills, car payments, expenses related to care for family members, even mortgages!

Page 5: Constructing Graduate Student Budgets

Federal Regulations on Budgets

How the Feds define COA:• An institution may use title IV, HEA program

funds to credit a student’s account at the institution to satisfy current year charges for:

• Tuition and Fees• Room and board• With student’s authorization, educationally

related charges incurred by the student

Page 6: Constructing Graduate Student Budgets

Budget ‘Drivers’

How an institution defines COA is often determined by certain criteria, for example:

• Term, Quarter, or other enrollment status• Housing • Residency• Program of study

Or in many cases-‘One size fits all’

Page 7: Constructing Graduate Student Budgets

Common Budget Components

Often charges are directly billed to the student. These include:TuitionBillable FeesOn Campus Housing Books and Classroom SuppliesInsurance

All Students are required to pay these costs Waivers accepted for some of these charges on

case by case basis

Page 8: Constructing Graduate Student Budgets

Common Budget Components

The most common ‘anticipated’ expenses considered COA allowances often include:Off Campus HousingPersonal ExpensesTransportationRequired Testing Fees

Page 9: Constructing Graduate Student Budgets

What are Allowances?

Allowances increase COA Allowances increase opportunities for students to

borrow Allowances increase potential for debt Allowances should be accessible for ALL

students who are >or = H/T Allowances should be reviewed each year for

accuracy of estimation

Page 10: Constructing Graduate Student Budgets

Determining Allowances

Sources for Determining Room and Board Allowances:

• Institutional comparison of by division/school• If services are on-campus, then this can be directly

billed in lieu of allowance• Local rental listing comparisons• Online surveys (survey monkey, etc)• Higher Ed data repositories, i.e.

• http://www.lib.umich.edu/govdocs/steccpi.html• Dept. of Labor BLS

Page 11: Constructing Graduate Student Budgets

Determining Allowances Using Indicators

Cost-of-living index A cost-of-living index measures differences in the price of

goods and services, and allows for substitutions to other items as prices change

Consumer Price index A consumer price index measures a price change for a

constant market basket of goods and services from one period to the next within the same city (or in the Nation)

The CPIs are not true cost-of-living indexes and should

not be used for place-to-place comparisons

Page 12: Constructing Graduate Student Budgets

Basis of Analysis for COLIndicators

Analysis involves constructing reasonable arguments for or against an increase in cost of living (COL) allowances

Indexing involves the collection and comparison of tangible or data driven ‘proof’, or indicators, to substantiate your arguments

Some indexing variables include:• Consumer Price Index –local affect of prices on consumers• Inflation-national affect of prices on consumers• Tuition and other billable item increases (and the % of COA in

budget that makes up these expenses)-direct affect of price increases for students

Page 13: Constructing Graduate Student Budgets

Example of Living Expense Analysis Using COL Indexing

Use CPI to test cost of common items students use that are not directly billed, i.e.

• Coffee• Utilities, like natural gas and electricity• Produce

Determine % of increase/decrease in cost of these items over a defined period

• Average increase/decrease of coffee in 2007 (BLS Database Link)

Page 14: Constructing Graduate Student Budgets

Example of Living Expense Analysis Using CPI

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual

2007 3.288 3.456 3.475 3.437 3.308 3.407 3.529 3.497     3.607 3.685  +.397

Series Id:  APU0000717311Area:       U.S. city averageItem:       Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm

Page 15: Constructing Graduate Student Budgets

Example of Living Expense Analysis Using CPI

CPI-U, US City Average, All Items: (NSA)  +0.3% in Feb 2008 (SA)  unchanged in Feb 2008 (NSA)  +4.0% since Feb 2007

CPI-U, US City Average, All Items Less Food and Energy: (NSA)  +0.3% in Feb 2008 (SA)  unchanged in Feb 2008 (NSA)  +2.3% since Feb 2007

CPI-U, US City Average, Medical Care: (NSA)  +0.5% in Feb 2008 (SA)  +0.1% in Feb 2008 (NSA)  +4.5% since Feb 2007

-------» SA- Seasonally Adjusted» NSA- Not Seasonally Adjusted» Click on the icon for 10 years of historical data

Page 16: Constructing Graduate Student Budgets

Other Methods of Determining Shifts in COL

Inflation has been defined as a process of continuously rising prices, or equivalently, of a continuously falling value of money

Using Tuition and other billable costs as a measure of inflation is often the fastest way to determine if an increase to COL allowances are necessary

Use an Inflation Calculator at: http://data.bls.gov/cgi-bin/cpicalc.pl

Page 17: Constructing Graduate Student Budgets

Beyond Basic COA

Certain items can be considered ‘add-on’ allowances:

• Dependent care expenses• Study abroad or selected programs of study• Disability related expenses• Loan fees• Computer purchase or rental• Car repairs• Medical expenses

Page 18: Constructing Graduate Student Budgets

Beyond Basic COA

What is NOT COA (and should not be considered for a budget increase):

• The purchase of a car• Miscellaneous personal expenses and room

and board for LESS than Half-Time students• Improvements on place of residence• Travel expenses related to job or residency

interviews

Page 19: Constructing Graduate Student Budgets

Beyond Basic COA

Changes to a Student Budget• Adjustments should be guided by enrollment or

program of study changes• Students who have unusual or extraordinary

living expenses above what was initially calculated as COA are eligible to file for an increase in their budget

• Budget appeals should be treated as special situations in all cases

Page 20: Constructing Graduate Student Budgets

Beyond Basic COA

Budget Appeal Process• Have a formalized process/procedure for

student’s to document and explain reasons for budget increase requests

• Receipts• Payments made or pending• Estimates

• Have a form in your FAO that can be used to standardize the information necessary for a budget increase request

Page 21: Constructing Graduate Student Budgets

Resources

U.S. Dept. of Labor; Bureau of Labor Statistics http://www.bls.gov

FSA Coach http://www.ed.gov/offices/OSFAP/fsacoach/lesson5_1/5_1_11.html

University of Michigan Document Center http://www.lib.umich.edu/govdocs/steccpi.html

NASFAA Encyclopedia http://www.nasfaa.org/Apps/Eplus/