To help students and parents understand the principles and rules of need analysis, the Financial Aid Committee at the David Geffen School of Medicine at UCLA offers the following information about the major factors which affect the determination of financial aid awards.

How Need-Based Decisions Are Made

Financial aid at the David Geffen School of Medicine is need based. This assumes that the parents and the student (and spouse) pay for the cost of education to the extent they are able and that financial aid will be used to supplement the effort the family is making. It also assumes that need can be calculated with uniformity and equity.

There are two need analysis formulas used. "Federal Methodology" (FM) is used to determine a student's eligibility for federal aid, including Federal Direct and Graduate PLUS Loans. Federal aid eligibility is determined from the data the student provides on the Free Application for Federal Student Aid (FAFSA). Using FAFSA data, FM calculates the student's "expected family contribution" (EFC) which is displayed on the Federal Student Aid Report (SAR) received by the student.

Because the EFC calculation ignores some forms of income and eliminates some assets from consideration, UCLA uses a different, more traditional formula called "Institutional Methodology" (IM) to determine a family's need for aid. IM more accurately and equitably determines the parents' ability to pay for a medical education from family income and assets. A student may have whatever federal aid is available based upon eligibility under Federal Methodology. The need for DGSOM aid, however, is determined solely on the basis of the Institutional Methodology.

Factors In Determining What Parents Are Expected to Provide

We review many financial factors such as income, assets, the number of family members, and the number of members currently enrolled in college in determining the parents ability to contribute to the cost of the student's education. A description of each factor is listed below.

Family Size - In general, this is the number of family members living in the same household who are claimed on the federal tax return. We do not include relatives (such as grandparents) living outside the home, even when supported by the family, who are not claimed on the federal tax return. "Adult children" who have finished their education and are not claimed on the federal tax return are also not included.

Family members in College - College matriculation of family members results in the equal division of the total parental contribution and only the student's portion of the contribution is used in determining need. Family members in college can include, in addition to the student and the siblings, one or both parents.

Divorce or Separation - In cases of parental divorce or separation, both parents are expected to provide information on individual financial aid applications. While divorce or separation may affect the extent to which one or both parents can contribute, it does not absolve either parent of this obligation. Our policy for determining the financial need of students whose parents divorce or separate is derived from the principle upon which we determine need of all of our students; that is, both parents (or step-parents) are responsible for the educational expense of their children to the extent that they are financially capable.

Parent Income - For institutional aid, 'income' is a reflection of the family's total annual income received (taxable and non-taxable).

Taxable Income - For all families the income used in the institutional need analysis will include wages or salaries, interest, and dividends. It can also include such things as business/farm profit, pensions, annuities, rents, royalties, trust income and other forms of miscellaneous taxable income.

• For those who own businesses and/or rental properties - depreciation on real property, automobiles, and some part of all other forms of depreciation, half the allowance for car and truck expense, wages paid to dependent children, and non-cash benefits such as automobile use and insurance coverage are customarily added back to income.
• Other types of losses such as capital losses and losses carried forward from prior years are also added back to income.

One-time additions to income - Capital gains or the cashing in of an annuity or pension, which are examples of one-time additions to income, are considered an exchange of assets and are not included in income.

Untaxed income - For all families, nontaxable income is also included under certain circumstances. This could be limited to Social Security Benefits, Veterans' Benefits, welfare or child support. In more complicated circumstances it can include voluntary annual contributions to tax deferred savings or retirement plans, housing and other living allowances, untaxed portions of pensions or annuities, Workers' Compensation and other forms of untaxed income or benefits.

Allowances from Income - Once income is established, certain non-discretionary expenses or allowances are deducted. These include:

• federal income tax
• state and local taxes
• mandatory retirement payments (i.e. Social Security)
• medical/dental expenses not covered by insurance up to a certain level
• employment allowance in single-parent households or when both parents work
• basic family maintenance allowance which varies by family size, but is the same for all families of a given size.

After these allowances are subtracted from total income (taxable and non-taxable), the need formula assumes that a portion of any remaining income can be used for educational expense. That portion increases as the remaining income increases. As a rough rule of thumb, the contribution from parents' income that the formula produces will range from a low of 5% to a high of 20% of all taxable and nontaxable income used in the analysis. For high income families, the percentage may go above 20%.

Parent Assets - Because assets contribute to a family's financial strength, they play a part in determining the parent contribution along with income. Assets used in the formula include:

• savings
• equity in real estate including the family home
• investments of all kinds (i.e. trusts, annuities, etc.)
• a portion of business/farm net value

Real estate current market value will rarely be considered lower than its purchase price and national real estate appreciation multipliers are often used to project market value. For family owned businesses and farms, accumulated depreciation, loans from shareholders, capital stock and retained earnings are not considered liabilities in calculating net value of these assets.

Automobiles and consumer goods are not included as assets, nor is the value of the parents' primary retirement fund.

Debts are subtracted from asset values to determine net worth, but the only debts used are those against the assets themselves or those over which the family has no control, such as medical expense. Consumer debt and debt of choice do not apply.

Asset protection allowance - Which increases as parents age and retirement gets closer, is subtracted from the total net worth, resulting in the parents' contribution from assets. In general, the asset contribution for parents will fall between 2% to 5% of net worth.

Parental Contribution - The parents' contribution from income is added to the contribution from assets resulting in the total parental contribution. This "total" parental contribution is then divided by the number of verified family members enrolled in college to yield the parental contribution.

What The Student Is Expected To Provide

Student Contribution - Each student aid recipient is expected to contribute toward his or her educational expenses from earnings (student's and spouse's) and from assets, which may include savings, investments, trusts, real estate, etc. These earnings and assets are used in the calculation of the student contribution.

Financial Need And The Financial Aid Package

Financial need is the result of the student budget or cost of attendance minus the calculated parent and student contributions. An award package composed of university scholarship and loan is provided to meet the need.

The David Geffen School of Medicine's need analysis system is based upon principles of equity: those with the same financial strength are expected to contribute the same amount from income and assets; when financial strength is different, the expected contribution is different with the contribution increasing as financial strength becomes greater. The principles of equity also require that income and assets be defined the same way for everyone and all allowances be non-discretionary in nature.

Obtaining Additional Assistance

Financing Options - There are many ways for families to manage their share of costs. The Student Financial Services staff at the David Geffen School of Medicine will be glad to discuss available payment and financing options.

Described in the Financial Aid Application, Pennies from Heaven and the Financial Aid Website are a variety of sources of need based and non-need based scholarships and loans for students. We encourage reading the information in these publications carefully in deciding whether one or more of these options may be appropriate. While our Student Financial Services staff can provide some basic information about most programs, we suggest contacting each program listed in Pennies from Heaven directly for detailed information.

Requests For Consideration

A need-based financial aid award represents the results of using the formula and principles outlined previously. If errors are made in the annual reporting or calculation of data, or if family circumstances have changed, aid awards can be reconsidered. However, we cannot make adjustments which would require exceptions to the standard principles and practices we use for all families.

You may request reconsideration if your circumstances have changed since the filing of the Need Access Student Application Diskette and/or FAFSA applications. Examples of the changes in circumstances which can be considered by the Financial Aid Committee are:

• total loss of employment for at least 10 weeks by either parent, disability or death of either parent, and extraordinary medical or other non-discretionary expenses during the current year. Such requests must be in writing (using the Petition for Re-evaluation form) including appropriate documentation.

Since the following factors would cause a violation of the principles of need analysis which apply to all families, the Committee will not give reconsideration due to:

• differences between the institutional need analysis and eligibility for federal aid under the Federal Methodology; aid offers from other colleges and universities (whether based on the other institution's definition of need for merit); the spending pattern of the family; or the consumer indebtedness of the family.