September 5, 2007

Dr. Sophia McArdle
U.S. Department of Education
1990 K Street, N.W.
Room 8019
Washington, D.C. 20006

Dear Dr. McArdle:

On behalf of the National Association of Student Financial Aid Administrators (NASFAA), an organization representing financial aid professionals at approximately 3,100 postsecondary institutions, I am submitting the following comments and questions on the Academic Competitiveness and National SMART grant programs NPRM published in the Federal Register on August 7, 2007.

We offer a number of comments and questions on the following pages; however, we must first express our disappointment that the Department chose not to address two issues in this NPRM.

The first issue involves the eligibility of certificate programs. This topic was discussed extensively in negotiated rulemaking sessions. Negotiators offered a variety of options beyond simply all or nothing. We understand that although the Department admitted that the law could be interpreted either way, it is a policy decision of the Department to exclude certificate programs, and so they remain ineligible. We are troubled not only by the Department's failure to address this issue, but also by the lack of discussion on this topic in the preamble.

We are also disappointed with the Department's failure to change the frequency of calculating the SMART grade point average (GPA) which must be calculated each term rather than yearly. Threading sections 401A(c) through (c)(3)(C)(ii), the law deems a student eligible "who, for the academic year for which the determination of eligibility is made... in the case of a student enrolled or accepted for enrollment in... the third or fourth academic year of a program... has obtained a cumulative grade point average of at least 3.0..." As was argued in the negotiations, the statutory language can just as well be interpreted as meaning that a GPA for SMART purposes is also determined on an annual basis for each academic year. Such an approach would cut the administrative burden with all the attendant timing issues and caveats regarding missing grades in half for each academic year.

Again, our comments are offered in the spirit of improving and clarifying the regulatory language to better serve student aid recipients and their families, improve the administration of the Title IV loan programs, and meet the administrative needs of financial aid offices and, if possible, reduce administrative burden on postsecondary institutions. If the Department has any questions about our comments, please contact me.

Sincerely,

Dallas Martin
President

Academic Year Progression (Sec. 691.6(a), (b), and (c))

To determine a student's academic year for ACG, the preamble and proposed 691.6(a) say that a school would have to consider a student's attendance in all ACG-eligible programs at that institution only (unlike current rules that look at the student's attendance in all ACG-eligible programs anywhere). We think this change is a positive improvement. However, proposed 691.6(d)(1)(i) directs a school to count all credits that are accepted towards the student's eligible program.. Please explain how the proposed language in 691.6(a) would be applied in the context of 691.6(d)(1). For example, a student transfers from an associate degree program to a bachelor's degree program at the same school, but not all credits transfer. How does the school treat the credits earned in the associate degree program that do not transfer? In that scenario, how would a student who received no ACG in the associate degree program (because of part-time enrollment) be treated, versus a student who did receive first-year ACG funds?

For SMART Grant purposes, an eligible program is defined as one that leads to a bachelor's degree in an eligible major. Under this definition, is a student considered to be in an eligible program only if he or she has declared or intends to declare an eligible major, or is the student considered to be in a SMART-eligible program as long as an eligible major is offered within that program? If the former, do credits earned while in the third year of a bachelor's program in an ineligible major fall under 691.6(d)(2)(ii) for purposes of counting or estimating weeks?

While we appreciate the Department's efforts to provide flexibility in the ways in which a school may estimate a student's weeks of attendance, we believe that the benefit of those efforts are lost by the Department's view that a school must designate only one alternative method for each academic program. We believe that a school should be able to apply the alternatives on a student-by-student basis if it wishes to do so instead of a program-by-program basis.

We are disappointed that there is no method under which weeks can be associated with AP credits or credits earned while not in an eligible program. The effect of this absolute prohibition is that a student cannot use AP or certain transfer credits to advance more quickly in his or her program should he or she wish to.

We believe that, regardless of how well the Department explains the new approaches, there will inevitably be confusion over the expiration of guidance in GEN-06-18. For example, while it may be fairly clear that the proposed alternatives are meant to replace the assumption method of the DCL, there is no explicit mention of the guidance regarding the end of the "fourth" academic year of eligibility. We believe it will be helpful for the Department to specify what aspects of prior guidance remain in effect and what specifically expires. Also, until now, the Department has issued year-specific guidance, such as determining rigorous secondary school program completion through a self-certification process; it would be helpful for schools if the Department would incorporate general principles for compliance with broad eligibility issues such as these into regulation so schools have a better basis on which to tool up their annual procedures. These programs have become very dependent on individual and varied school procedures, and come dangerously close to interfering with academic purview and admission policies. To this end, NASFAA recommends that the Department codify its policy that requires institutions to look only at student who self-certify their ACG eligibility through the Department's FAFSA application process.

Transfer Student (Sec. 691.6(d))

Under proposed Sec. 691.6(d)(3), an estimated number of weeks of instructional time must correspond to the credit or clock hours accepted in the same ratio as the weeks of instructional time in the eligible program's academic year is to the credit or clock hours in the academic year of the student's ACG or National SMART Grant eligible program. As written, 691.6(d)(3) is directive: the school must estimate the number of weeks based on accepted credit using the formula provided in the proposed rule.

1. Is our reading correct that neither the school nor the student has the right to require an exact accounting of weeks for credits earned at other institutions?

2. Application of 691.6(d)(3) is not conditioned upon a particular payment formula or program type. So, does 691.6(d)(3) encompass transfer students entering any kind of a program, even nontraditional formats, for the first payment period at that new school?

3. After a transfer student's first payment period in a standard term program at the new school, does the school, for subsequent payment periods, have a choice between exact accounting and the alternative designated for the student's program?

4. Is the transfer analysis in 691.6(d)(3) meant for placing the student's Title IV academic year upon entry only? That is, for a continuing student with previously transferred credits, is or can the alternative method designated for the student's program be applied to the student's total number of accrued credits including the transfer credits, or does the school have to apply the alternative method only to attendance at the current school from entry forward?

   For example, a school might have chosen the grade-level alternative as its standard approach for a particular program; is the transfer analysis under (d)(3) still a requirement or can the school assume the student has completed both components of all prior academic years based on his or her grade level upon entry?

   Here's a specific example. Suppose a student is transferring into a SMART-eligible program for which the academic year is defined as 24 credits and 30 weeks, but 30 credits are required for grade level advancement. The designated alternative for this program is grade level. The school accepts 48 credits for this student; using the transfer formula, 48 credits equates to 60 weeks so the student would be starting his third Title IV academic year even though he is categorized as a sophomore. Suppose he gets a SMART Grant award for that first payment period based on his third Title IV academic year status and an eligible GPA. Suppose he only earns 9 credits. As he starts his next term (his second term now at the current school) he has 57 credits and is still classified as a sophomore. What's his eligibility now?

   Since the transfer analysis is essentially the credits-earned alternative, why can an institution not continue to apply the credits-earned approach to that student regardless of the alternative otherwise chosen for his program of study?

5. If a student transfers into a program for which the designated alternative is terms attended, do you in that case just add weeks attended at the new school to the calculated weeks derived from the transfer analysis?

6. Does 691.6(e)(2) refer to all students except transfers in their first payment period but including students who transferred but are now in subsequent payment periods at the new school?

7. Can the institution to which a student transfers rely on the previous institution's determination that a program was an ACG/SMART eligible program if funds were awarded and/or disbursed?

8. Under the proposed rules, are schools still prohibited from paying "backwards" if a student's academic year classification changes and the student has not completely utilized the grant level for the new classification? With the switch in concept represented by the changes to 691.6(a) and (b), and the fact that a student can never get more than one grant per level, it seems to us that the previous rule is more restrictive than necessary.

9. How are students attending more than one school under a written agreement treated, both during the period covered by the agreement and upon returning to their home school?

Student Request To Determine Academic Year Level (Sec. 691.6(e))

The preamble (p. 44054) states that an exact accounting "would always preempt any use of the three alternative methods for determining the weeks of instructional time" and that if the institution performs an exact accounting for a given student it cannot then apply any of the alternatives to determine that student's academic year. The proposed regulatory language at 691.6(e)(3) is even more restrictive; it states that once an institution initiates an exact accounting it may not use an alternative method for that student. We have the following specific questions on this provision.

1. Does the regulation refer to an exact accounting just for a given payment period? Or, once a school uses an exact accounting for a student, must the school use exact accounting for that student from there on out, i.e., for all subsequent payment periods as well? The proposed language is not clear on this point.

2. Does it matter whether it was the school or the student who initiated the exact accounting? For example, if the student requests an exact accounting, does that request apply to the current payment period determination only or to all future determinations for the student as well by that school?

3. Can the student ever rescind his or her request? For example, the student may have made the request based on a misunderstanding of how progression works and an exact accounting could cause the student to lose funding.

4. If the school is performing an exact accounting for a continuing student who has credits previously transferred from another school, are weeks associated with the transfer credits still calculated using the formula in 691.6(d)(3)?

In addition, regarding the use of exact accounting as the "default" regulatory method, our staff had differing interpretations of the regulatory intent concerning alternative determinations of weeks of instructional time. One view is that, based on 691.6(e)(1), an exact accounting is always the default method unless you choose to apply an alternative to a given student. However, if you choose to use an alternative for that student, your only choice is the one alternative you designate for the student's program of study. The other view, based on (e)(2)(ii), is that the proposed rule means that if you designate an alternative for a program of study, that alternative becomes the default approach for all students in that program and any application of an exact accounting becomes the exception. Based on these views, we have the following additional questions.

1. If a school designates an alternative method of determining weeks for students in a particular program, does that mean that the school must use that alternative for all the students in the program unless an exception is made to use an exact accounting for a given student?

2. If the answer to (a) is yes, can the school make the choice to use an exact accounting in that scenario or is it only the student's right to do so? [691.6(e)(2)(iii) seems to address only the student's choice.]

3. Are we correct that whichever way is considered the exception (an alternative or an exact accounting), the school would not have to document why it used one approach or the other, i.e., either approach is valid as long as the results of an exact accounting is always used if performed?

4. In 691.6(e)(3), can you explain what the phrase "including an accounting pursuant to paragraph (e)(2)(ii) of this section" means?

5. If schools can decide on a student-by-student basis which method (exact accounting or the alternative designated for the program) to use, can a school decide it will always use the exact accounting method for certain groups of students within an academic program and always use its designated alternative for other groups? For example, a school might want to use exact accounting for any student who has AP or IB credits, but the grade level alternative for students who do not.

6. Can you explain why neither the school nor the student can have the benefit of both determinations (exact and an alternative) before determining which is actually more beneficial to that student given the student's unique circumstances? It seems especially onerous to say that a student who questions the school's determination using an alternative approach could actually cause a less advantageous outcome by triggering an exact accounting that must then be used. Counseling a student becomes impossible because you cannot perform the determination to advise the student whether or not she should request an exact accounting because, as the regulation is proposed, once you even initiate the exact accounting you have to abide by it.

Alternative Methods for Determining Weeks of Instructional Time (Sec. 691.6(e), (f), (g), and (h))

The three alternative methods for determining the weeks of instructional time for a student's academic year progression are permitted only for institutions with traditional academic calendar programs. Because these alternatives would not apply to eligible programs without traditional academic calendars, an institution would always be required to provide an exact determination of student academic year progression for these nontraditional programs.

How does restricting the use of the three alternatives to standard term-based program formats play out when students cross enrollment between different formats? For example, a student may take 6 credits from the standard-term day program, plus 6 credits from a non-standard term night program.

Further, according to the preamble (p. 44053): "Because these alternatives would not apply to eligible programs without traditional academic calendars, an institution would always be required to provide an exact determination of student academic year progression for these nontraditional programs." The proposed regulatory language at 691.6(e)(2)(i) accordingly conditions use of any of the three alternatives on the use of 691.63(b) or (c), i.e., formula 1 or 2. We note that this restriction is repeated at proposed 691.6(f)(1) and (g)(1), but states "may determine payments" under those formulas rather than "uses" those formulas; further, the restriction is not repeated anywhere in (h).

1. Currently an institution that uses formula 3 but could use formula 1 is able to use the assumption method as an alternative to exact accounting, but formula 2 programs are not. Also currently, formula 1 and 2 schools can use the summer alternative under 691.6(d). The proposed rule changes these conditions so that formula 2 programs can use the alternatives but it appears that formula 3 programs that could use formula 1 cannot use the alternatives. Is that correct?

2. How would intersessions offered between standard terms affect use of the alternatives? Currently, if an institution combines the intersession with one of the standard terms, the program is still considered to be traditional standard term; is that how you would view the ability to apply these alternatives?

3. How would the institution account for weeks attended in intersessions offered between standard terms under the alternative methods?

We think that the regulation would be clearer if some of the descriptive language from the preamble were incorporated into 691.6(f)(1) and (g)(1). For example, (f)(1) would be easier to follow if "by counting completed terms" were added before "under the procedures set forth..." The terms coined for the three alternatives in the preamble (terms-attended, credits-earned, and grade-level) are helpful handles.

"Grade-level" alternative (Sec. 691.6(h))

To use the "grade-level" alternative, an eligible program must qualify under proposed Sec. 691.6(h)(1)(ii) and (2)(i) by establishing that at least two-thirds of the full-time students in the program are completing at least the weeks of instructional time in the academic year for each grade level completed.

For the grade-level alternative, the preamble states that "at least two-thirds of the full-time students in the program are completing at least the weeks of instructional time in the academic year for each grade level completed." The proposed regulatory language requires that "at least two-thirds of the full-time, full-year students complete at least the weeks of instructional time of an academic year while completing each grade level during the three most recently completed award years..." However, in using this alternative, no weeks may be associated with certain credits such as those acquired through AP.

1. How does a heavy concentration of AP credit for freshmen affect the "grade-level" alternative? For example, let's say that at a particular school many incoming freshman for a given educational program receive AP credits. Suppose more than a third of the incoming class progress to sophomore standing after one semester of attendance because of the AP credit. How would that school calculate the two-thirds caveat for the grade-level alternative?

2. Also relating to AP credit, proposed 691.6(h)(1)(i) requires a student to have completed "at least the minimum credit hours for the prior academic years for that program in accordance with this section." Does "in accordance with this section" mean that AP credits do not count in that determination?

3. Are continuing students who previously transferred into the institution included in determining the two-thirds qualification to use the grade-level alternative? And how does (h)(1)(i) apply to them? For example, a student transfers in as a freshman but with enough credit so that after one term she becomes a sophomore. How is she subsequently treated under the grade-level alternative?

4. Section 691.6(h)(2)(ii) states that "for each of the ACG or National SMART Grant programs, an institution may make a determination under paragraph (h)(2)(i) of this section on an eligible program basis or an institutional basis." If the institution makes the determination on an institutional basis, must it elect the grade-level alternative for all of its programs, or can it still designate either of the other two alternatives for some if its programs? [Also, we note that the preamble as quoted above implies that the determination has to be made for the individual program.]