Details of New Grant Programs Revealed by ED at NASFAA'S 2006 Leadership Conference

More than 80 financial aid administrators convened March 5 to 7, 2006 in Washington, D.C. to discuss current federal aid policy and best financial aid practices at the annual NASFAA Leadership Conference.

The conference provides state and regional association leaders and future leaders with the nuts and bolts on how to successfully administer associations. It also allows them to network and share ideas with other leaders across the country.

The Deficit Reduction Act that President Bush signed into law on February 8 was a hot topic at the conference. Many of the student aid provisions in the bill were enacted to go into effect on July 1, giving financial aid administrators and the Department of Education little time to make the necessary changes to adopt the provisions in a consistent manner.

How the Department would distribute and administer the $790 million available this year for two new grant programsAcademic Competitiveness Grants and Science and Mathematics Access to Retain Talent (SMART) Grantswas a top concern for conference attendees. (A summary of the programs appears below.) Five representatives from the Department attended the conference: Jeff Baker, Kay Jacks, and Claire "Micki" Roemer from Federal Student Aid and David Bergeron and Anthony Jones from the Office of Postsecondary Education. Baker, Jacks, and Bergeron addressed the conferees to shed some light on how ED would implement the new grants.

The Department's Guidance Schedule

The ED officials highlighted three dates when aid administrators should receive Department guidance on the two programs.

• Within the "next couple weeks" the Department will issue a Dear Colleague Letter (DCL) to institutions providing a "high-level view" of how the Department will implement new programs.

• By May 1 the Department will issue final regulations, closely modeled on the existing Federal Pell Grant Program regulations. There will be no Notice of Proposed Rulemaking (NPRM) to request public comment and the rules will not be subject to the negotiated rulemaking process. However, a Department official indicated that the negotiated rulemaking process make be conducted later. The final rules issued on May 1 are likely to apply for at least two years.

• By July 1 the Department will complete the process of identifying what qualifies as a rigorous high school curriculum, which students will have to complete to be eligible for the Academic Competitiveness Grants. The Department also plans to set up a Web site and contact protocol for students who believe their high school curriculum was rigorous but is not included on the Department's list. The Department's intent is to keep postsecondary schools from having to deal with any such challenge by students.

Identifying and Awarding Eligible Students

To qualify for either grant program a student must be a U.S. citizen and be enrolled full-time in a degree-granting program. Academic Competitiveness Grants will be given to first- and second-year students who have taken a rigorous high school curriculum and have not been enrolled previously in an undergraduate program. The law also specifies that first-year grant recipients must graduate high school after Jan. 1, 2006, and second-year grant recipients graduate high school after Jan. 1, 2005. Second-year grant recipients must also retain at minimum a 3.0 overall GPA. SMART Grants will be given to third- and fourth-year students pursuing a degree in math, science, technology or certain foreign languages, who maintain at least a 3.0 in the classes required for that major.

The Department officials revealed an outline for how it will institute the new grant programs, although they are still working on the details. In designing the process, the Department plans to utilize the existing Pell Grant system to administer the new grants as much as possible to ease the transition.

Under the outline, the Department identifies Pell Grant recipients who appear to qualify for the new grants and notifies these students of their possible eligibility for the grants. The student then self-identifies his or her potential eligibility through an addendum to the FAFSA. Financial aid administrators would also be able to update the FAFSA for their students. Department officials indicated they would provide an amended paper version of the FAFSA for students who did not fill out the FAFSA on-line. The Department would then notify the school, although it remains unknown exactly how that will be accomplished. The school then verifies the student's qualifications to ensure the student is eligible. If the student is eligible, the school notifies the Department through the Common Origination and Disbursement (COD) system. The Department then provides the grant allocation to the school. There will not be a pre-allocation, according to the Department officials.

Verification Challenges

A Department official noted that the biggest challenge for the Department would be to classify what constitutes a rigorous high school curriculum. Officials said they hope to use existing state programs that recognize rigorous curricula and that the Department's secondary education department was working to create a list of qualifying curricula. Verifying that a student has completed one of these curricula will be a significant administrative challenge for schools, especially schools that don't currently track student participation in specific high school curricula.

Verifying first- and second-year student high school graduation dates could also be a challenge for some schools. The Department has no way of identifying a student's graduation date because it is not required on the FAFSA. They will try to identify eligible students by their age and rely on the institutions to provide graduation date verification. Many institutions have this information, but some do not require it for admission.

Gray Areas

Using state-recognized high school curricula as a benchmark for a rigorous curriculum raised a number of concerns among conference attendees who wondered whether private and home school curricula are appropriately recognized by the state. The legislation seems to exclude students from these schools from eligibility for the Academic Competitiveness Grant, but officials assured conference attendees that they were working to accommodate those students. Officials said the Department is looking into creating alternative standards for students from private and home schools, such as standardized test scores.

The provision that keeps students who have previously been enrolled in an undergraduate degree program from being eligible for either grant program raised concerns that students who are dually enrolled in college while they are still in high school would not be eligible for the grants once they entered college. Department officials assured attendees that they did not think that was the intent of the law and would work to ensure that these students would be eligible for the new grants.

The Department is working to clarify the time frame that students would be eligible for the grants. Eligible students may receive only one grant for each year of college. For instance, an Academic Competitiveness Grant recipient could receive only one grant for his or her freshman year and one grant for the sophomore year. Department officials said they were wrestling with this stipulation because a full-time student could earn 24 credits and still not be considered a sophomore at some schools.

Attendees also expressed concerns about various situations where a student loses eligibility while receiving the new grants (e.g., switching majors, dropping classes, stopping out, and lowered GPAs). Would the student's grant resume with regained eligibility, or would the remainder be lost because the academic year elapsed? Department officials were not able to answer these specific questions but assured attendees they were working out the details. One official noted that if a student switched majors to become eligible for the SMART Grant the Department would work to ensure the student received aid under the programs because that is the Congressional intent.

Attendees also raised concerns that the major requirements for the SMART Grants were vague and wanted more details about what majors would qualify because the range of programs that could qualify is large. For example, would a math education or science education major be eligible? There was some disagreement among the officials about answers to these questions. ED officials said they were planning to use the Integrated Postsecondary Education Data System (IPEDS) to track majors that make a student eligible for the SMART grant. Each major has a corresponding code in the IPEDS system and the Department plans to develop a list of codes that qualify. Financial aid administrators would be required to provide those codes to the Department. The Department plans to work with individuals in the academic community to determine which majors will ultimately qualify.

Other Concerns

ED officials indicated that they were planning to hold their first meetings with major software providers this month to discuss how the Department would coordinate the providers to help update school software to accommodate changes in the law. The Department plans to hold at least one meeting a month up to implementation to address the software needs of schools and the Department.

More generally, some attendees questioned if the SMART grant programs would be able to accomplish the goal of encouraging students to earn a math, science, technology or foreign language major. They noted that many beneficiaries of the grants during the first few years of the program will have likely already chosen their major without the motivation of the program. And, the program expires after five years so there is little time to change students' minds about what field of study to enter.

There were also concerns that the Academic Competitiveness Grant would generally not be available to students from inner-city and rural school districts because these districts do not provide as many rigorous high school curricula as wealthier school districts.

By Haley Chitty
NASFAA Assistant Director for Communications