The second round of Negotiated Rulemaking on the Academic Competitiveness Grant (ACG) and the National Science and Mathematics Access to Retain Talent (SMART) Grant programs concluded Tuesday with many unanswered questions about what regulatory language the Department of Education will draft to address academic year progression and determining a rigorous high school curriculum.

These two issues, crucial to administering the two new grant programs, caused the most debate and concern among negotiators and Department officials. The complexity of these issues was apparent as the Department did not release draft proposed regulatory language for these issues until Friday, two days before negotiated rulemaking began.

A major question raised by the draft proposed language developed by the Department was how to create enough flexibility for institutions to track students' progress in a way that maximizes ACG/SMART eligibility and awards. Impinging on that debate were concerns about equitable treatment of students in various situations. Administrative burden imposed by tracking weeks of instruction in addition to credits accrued, and the differential treatment of credits depending on their source, also contributed to the lack of consensus on this issue. A more comprehensive summary of the Department's draft proposed regulations and the discussion at the negotiated rulemaking session is included below.

Some negotiators did not expect the rigorous high school curriculum issue to be complicated as they believed they had come to a relatively clear understanding of the issue during the first negotiated rulemaking session. However, Education Secretary Margaret Spellings sent Department officials to the session with a discussion paper outlining proposals that ranged from deferring to state definitions of selectivity to use of a more challenging and more specific set of courses to define a rigorous high school curriculum.

Negotiators generally opposed these new proposals. Some argued that any federal involvement in defining rigorous programs infringes on states' rights to set high school curriculum. Others believed that so long as the option for states to identify specific rigorous curricula is maintained, additional options defined by ED provide access to ACG and SMART Grants to other students who might otherwise be excluded. A more comprehensive summary of the debate on this item is included below.

Another contentious issue was the Department's decision to keep students in certificate programs ineligible for ACG awards. Department negotiators made it clear that they could read the statute to allow certificate programs, but budget restrictions and the possibility of ratable reductions prevented them from making certificate programs eligible. Negotiators maintained that the budget argument was invalid, but did recognize that opening the program to students in certificate programs could raise some fraud issues. A more comprehensive summary of this debate is included below.

Several issues surrounding calculation of the GPA (especially for transfer students) also caused debate and unresolved concerns, as noted below.

Tentative Agreement on Mandatory Participation

Negotiators came to a tentative agreement that the regulations would remain unchanged and mandatory participation in the ACG and SMART programs would be required for schools that participate in the Pell Grant program. There was some concern for the administrative burden on small institutions with a small population of ACG/SMART-eligible students, but negotiators also noted that every student eligible for these grants should be able to get them no matter what institution they attend.

Tentative Agreement on Requirement that Pell and ACG or SMART Are Disbursed at the Same Institution when Awarded Within the Same Term

There was tentative agreement, and no discussion, on this issue since negotiators agreed that the administration of the ACG and National SMART Grant programs is inextricably linked to the Federal Pell Grant Program. Thus, it is logical to require the same institution that administers the Federal Pell Grant Program also to administer the ACG and National SMART Grant programs in a consortium arrangement.

GPA Issues

Some negotiators remained uncomfortable with draft proposed language for Grade Point Average issues. Four related issues were discussed (transfer students, coursework, timing of GPA calculation, and eligibility for disbursement). The Department's revised draft language clarifies some questions that were raised previously, and also proposes changes. One chief point of contention remains the coursework that should be used to calculate a GPA for transfer students. Another is identifying the point at which a transfer student reaches the end of the first academic year of study. Some negotiators indicated that they would try to come up with other alternatives for consideration.

Tentative Agreement on Eligible Majors

Negotiators reached a tentative agreement on a process allowing institutions to request additional majors to be added to the list of eligible majors for an award year. Negotiators also reached a tentative agreement on a procedure to validate student intent to declare an eligible major to ensure an institution is in compliance in case of an audit. This tentative agreement was reached with the understanding that the Department would include some language in the preamble to clarify that students can become eligible in a payment period by declaring an eligible major.

Tentative Agreement on Departmental Monitoring of Disbursements by Academic Year

Although there is no draft proposed regulatory language for this issue, negotiators reached a tentative agreement on the Department's concept of monitoring. Department officials said they would do all they could to ease the reporting burden for institutions. Disbursements will be monitored in the same way as Pell Grants are, through NSLDS and Multiple Reporting Record (MRR) reports.

Issues Related to Unresolved Agenda Items

A few of the negotiated rulemaking issues were tied to other issues that needed to be clarified before a tentative agreement could be reached. Treatment of credit earned through AP/IB courses and/or credit earned in high school through dual-credit programs and early college programs was tied to the issues of academic year progression and GPA calculation. Negotiators did not come to a tentative agreement on either of these agenda items. Similarly, the definition of "successful completion" of a rigorous secondary school curriculum is tied to defining a rigorous curriculum and so was left unresolved.

Academic Year Progression

How to measure academic year progression is the most complex issue in creating regulations for implementing ACG and SMART. The big obstacle is the legislative definition of academic year which includes a time element (measured in weeks of instruction) and a credit element. Unfortunately, the time and credit measures don't always match, creating gray areas that are hard to regulate.

In the beginning years of the program this discrepancy is in part dealt with in a Dear Colleague Letter (DCL-06-18), which allows certain schools to assume that each increment of credit accumulation used in the academic year definition equals the number of weeks in that definition. However, the Department maintains that this guidance does not follow the intent of the law and is adamant about changing the regulatory language on academic year progression to comply with the law.

The draft regulatory language on academic year progression issued by the Department, which is still under review by the Department, would generally require an exact accounting of weeks of instruction in addition to credits. However, the draft rules would also give institutions some options, under certain circumstances and with conditions, to assume weeks of instruction based on credits earned, terms attended, or grade level designation. While all credits awarded (except for remedial work that is not on a postsecondary level) count in the credit component of the Title IV academic year definition, in neither the exact accounting nor any of the options may weeks be associated with AP or IB credits, credits earned while not a regular student in an ACG- or SMART-eligible program (which includes college coursework while still in high school), or credits from competency-based exams or life experience.

For transfer students, an institution may construe a number of weeks based on the total number of credits accepted, in proportion to the academic year definition. If the institution knows any of these credits are derived from methods for which weeks are not recognized, however, those credits must be excluded from this conversion to weeks.

The negotiators generally supported the concept of multiple options that would give institutions flexibility to determine academic progression in various ways to ensure the maximum benefit for students, but some argued that different types of credit should be treated the same. Most negotiators pressed for the ability to apply any option on a student-by-student basis, although the Department did not commit to any agreement on that approach, and, in fact proposed that an institution must choose one accounting method for all students in a given academic program.

Unfortunately, to provide this flexibility, the regulations have become very complex. Further, the options are available only for students who are in traditional programs that qualify for payment under formula 1 or 2.

While negotiators generally applauded the time and effort the Department put in to the draft proposed language to ensure intuitions maintain flexibility, they also raised several concerns about the language.

One scenario that troubled negotiators was a student who accelerated through college by acquiring college credit in high school and beginning college with sophomore status. Under the draft proposed language, these students would likely receive two years of ACG, but during their sophomore and junior years, and then one year of SMART in their senior year. For these students, graduating early would cost them a substantial amount of aid because the credit they earned in high school would count towards their degree but would not translate into weeks of instruction for progression in the grant programs.

Negotiators argued that this went against the spirit of the law which was trying to motivate students to take rigorous high school curriculum and get through college in a timely manner. This language seems to hurt students for accelerating through college, they noted.

The Department agreed, but pointed out that if this type of student does not choose a SMART eligible major they would still receive two years of ACG. Department negotiators said they designed the language in this way because they thought this would ultimately help more students.

This same student, under the grade level approach, would probably get a second-year ACG and two SMART Grants, assuming an eligible major. However, a student who begins as a sophomore might run into an eligibility issue if none of the incoming credits have grades associated with them (such as AP or IB credits), since no GPA could then be calculated.

Another concern among negotiators was the fact that the proposed system could be perceived as inequitable. The same student could receive different awards and have a different eligibility status depending on which method was used to determine academic progression. Department officials recognized this and noted that the institution might be given the flexibility to use the method that best served its students and could possibly be allowed to institute the exact accounting method in certain situations to get a student the most aid possible. Negotiators appreciated this flexibility, but questioned if schools, especially large institutions, would have the administrative resources to look at each student individually to determine the method that offered the most benefits.

The fact that the proposed system would be so complex meant that it would be unlikely that students and parents could understand it well enough to notify administrators that another method would get them more aid. Department officials recognized the complexity, but argued that complexity was a result of offering options. Officials said they could make a simpler system, but it would not have the same amount of flexibility.

Rigorous High School Curriculum

Department officials were instructed by Secretary Spellings to revisit the issue of defining a rigorous high school curriculum with the hope of increasing student access to the ACG program, simplifying the program for students, and aligning high school curriculum with higher education coursework.

In order to spark discussion, Department officials circulated an issue paper outlining several options to accomplish Spellings' goals. Some of these options define specific course work that would be required to qualify for ACG. Some negotiators did not welcome these options.

One noted that the intent of Congress was clearly not to have the Department impede on states' right to set curriculum. The options set before the negotiators are a clear violation of that intent, the negotiator argued.

Others argued that many states and local school districts would have a hard time ensuring that students would have access to the required courses to be eligible for ACG awards. They argued that, while Spellings' goals were admirable, states and regions would need more time to supply the teachers and classes needed to meet the proposed requirements. One example highlighted by negotiators was lack of access to science labs in rural school districts. Negotiators noted that the options seemed to make it more difficult for students to qualify for ACG, reducing access to the grant aid.

Most negotiators said that the current regulatory language is satisfactory and changes to the current regulations would cause several problems.

One noted that the Spellings had already seemed to set a precedent by setting some minimum requirements. The negotiator suggested that considering this, it might be helpful to know what Spellings' expectations are and what she is going to expect moving forward. Another added that there should be a focus on what Spellings expects, but it should be confined to that, not codified in regulations.

Negotiators recognized the importance of increasing high school curriculum rigor, but warned that these increases should be implemented in a tiered approach to provide plenty of lead time so students and schools can prepare. Under the options presented, many students would be penalized because of lack of access to the courses required because states are not prepared to ensure that students have access to highly qualified math and science teachers.

The country is not prepared and kids would suffer, one negotiator noted. More regulations will penalize the poorest of the poor. States need some flexibility to allow the poorest to benefit of these programs, negotiators argued.

A few negotiators did endorse the Department's proposal to make public school students that meet the coursework requirements for admission to a states' most selective public four-year university eligible for ACG. Negotiators said that this is another option for colleges to look at if a student doesn't qualify in other ways, so it could make more students eligible. Others were concerned that identifying the most prestigious state school in a multi-campus system could give rise to infighting and inequity.

Documenting Rigorous Curricula

Another aspect of the Department's rigorous curriculum proposal was documenting these programs. The Department's discussion paper proposed one possibility under which the Office of Federal Student Aid (FSA) would send state education agencies (SEAs) the names of Pell-eligible students and SEAs would certify the students who completed a rigorous curriculum. FSA would then notify institutions of a student's eligibility.

While negotiators welcomed the idea of relieving institutions of this administrative burden, they questioned if the option was practical. They argued that it would be hard to get everyone on board. Some speculated that this method could hamper documentation, as few SEAs would be able to handle the administrative burden on a timely basis.

Many admitted that this could be a good goal because SEAs had access to the appropriate information.

The Department's alternative documentation option also led to the suggestion to have LEAs document a student's completion of a recognized rigorous curriculum on the student's transcript. Again negotiators appreciated the idea and the goal, but some questioned if this would place too much administrative burden on LEAs.

Certificate Programs Remain Ineligible

Negotiators argued that the budgetary constraint argument was not a good rationale for this decision. They said that their institutions could not find enough ACG-eligible students to use up the dollar amounts allocated for the program. In addition, they said that few certificate students would be eligible for ACG grants because many of these students are older and only go to school part-time. This makes the fiscal impact of changing this regulation insignificant. They argued that, while the number of certificate students who qualify for ACG would be small; these would be the type of students that Congress was trying to help when it created this program.

One negotiator said that these are highly-qualified students who do not attend two- or four-year institutions and ACG could reduce financial barriers and encourage them to pursue their postsecondary goals. Not making this change would shut a door of opportunity.

Negotiators also maintained that the ACG was relatively cheap compared to the SMART program so additional ACG awards would not likely cause ratable reduction.

Department officials remained set against changing this regulation. They said that, while the first-year of ACG was not seeing the volume of participation expected, they expected participation to increase in future years. They reminded negotiators that ratable reduction would affect all programs over all years and indicated they were proceeding cautiously to avoid this scenario. Department representatives also argued that making certificate programs eligible would likely increase the number of ACG-eligible students in these programs. They also expected more high school students to take a rigorous high school curriculum and be eligible for ACG in the future.

Department officials also argued that fraud was a major concern when considering making certificate programs eligible. They asked if there was a manageable way to include these programs without having institutions claim that all of its certificate programs articulate into two- or four-year degrees just so they can be ACG eligible.

The Department gained some sympathy from negotiators who recognized the importance and complexity of preventing fraud. However, negotiators seemed set on opening the program up to students in certificate programs and said that the Department should have the intellectual wherewithal to prevent fraud.

Department officials indicated that it was a subject they were willing to go back and review.

By Haley Chitty
NASFAA Assistant Director for Communications

Posted 03/09/07 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.