Constructing Graduate Student Budgets

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

2. 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?

3. 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

4. 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!

5. 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

6. 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’

7. Common Budget Components • Often charges are directly billed to the student. These include: • Tuition • Billable Fees • On Campus Housing • Books and Classroom Supplies • Insurance • All Students are required to pay these costs • Waivers accepted for some of these charges on case by case basis

8. Common Budget Components • The most common ‘anticipated’ expenses considered COA allowances often include: • Off Campus Housing • Personal Expenses • Transportation • Required Testing Fees

9. 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

10. 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

11. 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

12. 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

13. 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)

14. Example of Living Expense Analysis Using CPI Series Id:  APU0000717311Area:       U.S. city averageItem:       Coffee, 100%, ground roast, all sizes, per lb. (453.6 gm

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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/