NASFAA continues its examination of the Department of Education's Nov. 1 Final Rule on the Student Assistance General Provisions that included the Academic Competitiveness Grant (ACG) and National Science & Mathematics Access to Retain Talent (SMART) Grant programs. NASFAA is discussing some of the implications of these rules with the Department. As we learn more information over the coming days, we will continue to publish articles in Today's News to inform NASFAA members of what we have learned.
In this article we examine the final rules on two issues: mandatory institutional participation in the two new grant programs and the administrative cost allowance.
Mandatory Institutional Participation
The Department received several comments in response to the July 3 interim final regulations that require an institution to participate in the ACG and National SMART Grant programs in order to continue participating in the Federal Pell Grant Program.
"We have serious concerns about requiring an institution to participate in the ACG and National SMART Grant programs if it wishes to continue its participation in the Federal Pell Grant Program," wrote NASFAA President Dallas Martin in a letter to the Department on Aug. 10. "While the intent is to, as widely as possible, have student eligibility for ACG and SMART Grants assured, this requirement is an infringement of institutional autonomy."
Many expressed concern about the lack of time that institutions were given to implement many of the new ACG/SMART Grant regulations. They contended that mandatory participation - by threatening to revoke Federal Pell Grant funds - would negatively impact institutions that are already operating at capacity, and would ultimately harm the students at these institutions.
Final Rule: The regulation remains unchanged, forcing eligible schools to offer the ACG/SMART Grant programs if they wish to remain eligible participants in the Federal Pell Grant Program. The Secretary of Education believes that the Department has been mandated by Congress to ensure that financially needy students receive all of the grants to which they are entitled. The Secretary believes that this requirement will accomplish this goal by assuring that Pell-eligible students - who may also qualify for ACG/SMART Grant funds - receive all grants to which they are entitled.
No Administrative Cost Allowance
Commenters raised objections to the July 3 interim final regulations because they excluded an administrative cost allowance to institutions that participate in the ACG/SMART Grant programs despite the significant administrative burden of implementing these regulations within such a short time limit.
"The Department compounds the impact of sudden implementation by announcing that no administrative cost allowance will be paid for these programs, even though HEA Section 489(a) states: From the sums appropriated for any fiscal year for the purpose of the program authorized under subpart 1 of A, the Secretary shall reserve such sums as may be necessary to pay to each institution with which he has an agreement under section 487, an amount equal to $5 for each student at that institution who receives assistance under subpart 1 of A,'" Martin wrote in his Aug. 10 letter.
Final Rule: The Department will not pay additional cost allowances for the administration of the ACG/SMART Grant programs. The Department argued that institutions are not entitled to additional funding on top of the administrative cost allowance provided for Federal Pell Grant Program administration because students receiving ACG and National SMART Grant funds are already receiving Federal Pell Grant funds. In other words, because the institution already receives an administrative cost allowance for each Federal Pell Grant recipient, and because each ACG/SMART Grant recipient will be a Federal Pell Grant recipient at some point during the student's award year - the school will not receive additional cost allowance above the $5 paid per Federal Pell Grant recipient.
Click here to read part 1 on prior enrollment and federal pell grant eligibility.
By Justin Draeger
NASFAA Assistant Director for Communications
Posted November 13, 2006 on www.NASFAA.org, the Web Site of the
National Association of Student Financial Aid Administrators (NASFAA).
Copyright 2006. Redistribution to non-NASFAA institutions is prohibited
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