Student Assistance General Provisions; Federal Perkins Loan Program; Federal Work-Study Programs; Federal Supplemental Educational Opportunity Grant Program; Federal Family Education Loan Program; William D. Ford Federal Direct Loan Program; Federal Pell Grant Program; Academic Competitiveness Grant Program; and National Science and Mathematics Access to Retain Talent Grant Program, 37990-38012 [06-5937]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 71, Number 127 (Monday, July 3, 2006)]
[Rules and Regulations]
[Pages 37990-38012]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-5937]



[[Page 37989]]

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Part III





Department of Education





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34 CFR Parts 668, 674 et al.



Establishment of Regulations for the Academic Competitiveness Grant and 
National Science and Mathematics Access to Retain Talent Grant 
Programs, and Grant and Loan Program Amendments; Interim Rule

Federal Register / Vol. 71, No. 127 / Monday, July 3, 2006 / Rules 
and Regulations

[[Page 37990]]


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DEPARTMENT OF EDUCATION

34 CFR Parts 668, 674, 675, 676, 682, 685, 690, and 691

RIN 1840-AC86


Student Assistance General Provisions; Federal Perkins Loan 
Program; Federal Work-Study Programs; Federal Supplemental Educational 
Opportunity Grant Program; Federal Family Education Loan Program; 
William D. Ford Federal Direct Loan Program; Federal Pell Grant 
Program; Academic Competitiveness Grant Program; and National Science 
and Mathematics Access to Retain Talent Grant Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Interim final regulations; request for comments.

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SUMMARY: The Secretary amends title 34 to establish regulations for the 
Academic Competitiveness Grant (ACG) and National Science and 
Mathematics Access to Retain Talent Grant (National SMART Grant) 
programs. The Secretary also amends the regulations related to the 
Student Assistance General Provisions, Federal Perkins Loan Program, 
Federal Work-Study Programs, Federal Supplemental Educational 
Opportunity Grant Program, Federal Family Education Loan Program, 
William D. Ford Federal Direct Loan Program, and Federal Pell Grant 
Program. These interim final regulations and amendments are needed to 
implement provisions of the Higher Education Act of 1965 (HEA), as 
amended by the Higher Education Reconciliation Act of 2005 (HERA).
    The interim final regulations for the ACG and National SMART Grant 
programs specify the eligibility requirements for a student to apply 
for and receive an award under these programs for the 2006-2007 award 
year. These interim final regulations also identify the roles of 
institutions of higher education (institutions), State educational 
agencies (SEAs), and local educational agencies (LEAs) in administering 
the programs. These interim final regulations will be effective for the 
2006-2007 award year. The Secretary is, however, soliciting comments on 
all aspects of these interim final regulations and may, for the 2007-
2008 award year, amend and finalize them as appropriate in response to 
comments received. For regulations that would take effect for the 2008-
2009 award year and subsequent award years, the Secretary intends to 
conduct negotiated rulemaking, as required under section 492 of the 
HEA.

DATES: These regulations are effective August 2, 2006. The Department 
must receive any comments on or before August 17, 2006. Affected 
parties do not have to comply with the information collection 
requirements in Sec. Sec.  691.12, 691.15, and 691.83 until the 
Department of Education publishes in the Federal Register the control 
numbers assigned by the Office of Management and Budget (OMB) to these 
information collection requirements. Publication of the control numbers 
notifies the public that OMB has approved these information collection 
requirements under the Paperwork Reduction Act of 1995.

ADDRESSES: Address all comments about these interim final regulations 
to: Fred Sellers, U.S. Department of Education, P.O. Box 33184, 
Washington, DC 20033-3184.
    If you prefer to deliver your comments by hand or by using a 
courier service or commercial carrier, address your comments to: Fred 
Sellers, 1990 K Street NW., room 8039, Washington, DC 20006-8542
    If you prefer to send your comments through the Internet, you may 
address them to us at the U.S. Government Web site: https://
www.regulations.gov.
    Or you may send your Internet comments to us at the following 
address: ACG.NSG@ed.gov.
    You must include the term ``Academic Competitiveness and National 
SMART Grants'' in the subject line of your electronic message.

FOR FURTHER INFORMATION CONTACT: Jacquelyn Butler, U.S. Department of 
Education, 1990 K Street, NW., room 8053, Washington, DC 20006-8544. 
Telephone: (202) 502-7890. Sophia McArdle, U.S. Department of 
Education, 1990 K Street, NW., room 8019, Washington, DC 20006-8544. 
Telephone: (202) 219-7078.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Relay Service (FRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Background

    These interim final regulations implement certain provisions of the 
Higher Education Reconciliation Act of 2005 (Pub. L. 109-171), enacted 
on February 8, 2006, 20 U.S.C. 1070a-1 (HERA), amending the Higher 
Education Act of 1965, as amended (HEA).
    Section 8003 of HERA amended the HEA by adding a new section 401A 
establishing the ACG and National SMART Grant programs to assist 
eligible students in paying their college education expenses and 
appropriating funds for these programs starting with the 2006-2007 
award year, beginning on July 1, 2006. The ACG Program awards grants to 
eligible financially needy students who complete a rigorous secondary 
school program of study. An ACG is available during a student's first 
and second academic years of undergraduate education in an eligible 
undergraduate program. The National SMART Grant Program awards grants 
to eligible financially needy students who are pursuing majors in the 
physical, life, or computer sciences, mathematics, technology, 
engineering, or foreign languages critical to the national security of 
the United States. A National SMART Grant is available to students 
during the third and fourth academic years of undergraduate education 
in an eligible undergraduate program.
    Under its principles for regulating, the Department of Education 
(Department) regulates only when absolutely necessary. The Department 
regulates in a way to improve the quality and equality of services to 
its customers and in the most flexible and least burdensome way 
possible. These interim final regulations are necessary to implement 
the ACG and National SMART Grant programs.

Significant Regulations

    We group major issues according to subject. We discuss other 
substantive issues under the sections of the regulations to which they 
pertain. Generally, we do not address regulatory provisions that are 
technical or otherwise minor in effect.

Relationship Between the Federal Pell Grant Program and the ACG and 
National SMART Grant Programs

    The ACG and National SMART Grant program interim final regulations 
duplicate those of the Federal Pell Grant Program to the extent 
practicable given the similar nature of these programs. Like the 
Federal Pell Grant Program, the ACG and National SMART Grant programs 
provide for direct grants from the Federal Government to students to 
assist in paying their college expenses. In addition, a student must be 
receiving a Federal Pell Grant to be eligible for an ACG or National 
SMART Grant.
    The Secretary will be administering the ACG and National SMART 
Grant

[[Page 37991]]

programs using the same delivery system that the Secretary uses for the 
Federal Pell Grant Program. The Secretary expects that this 
coordination of administrative requirements will assist participating 
institutions in administering these programs, reduce the amount of 
additional institutional administrative burden and paperwork, and 
simplify the process for students to apply for assistance under these 
programs.
    Accordingly, the following definitions are repeated in the ACG and 
National SMART Grant program interim final regulations without changes 
from the Federal Pell Grant Program regulations:
     Institutional Student Information Record (ISIR).
     Payment Data.
     Student Aid Report (SAR).
     Undergraduate Student.
     Valid Institutional Student Information Record (valid 
ISIR).
     Valid Student Aid Report (valid SAR).
    In addition, Sec. Sec.  691.61, 691.71, 691.78, 691.79, 691.81, 
691.82, and 691.83 of the ACG and National SMART Grant program interim 
final regulations do not reflect any substantive changes from the 
corresponding sections in the Federal Pell Grant Program regulations 
(34 CFR part 690). These sections are repeated in these interim final 
regulations to provide a complete description in part 691 of the 
program-specific requirements for the ACG and National SMART Grant 
programs. Other sections that implement specific ACG and National SMART 
Grant program requirements reflect Federal Pell Grant Program 
requirements to the extent practicable.

Part 668--Student Assistance General Provisions

    The following sections in 34 CFR part 668 are being amended to 
reflect specific requirements applicable to the ACG and National SMART 
Grant programs.
Section 668.33 Citizenship and Residency Requirements
    Statute: Section 401A(c)(1) of the HEA requires that a student be a 
citizen of the United States to be eligible for the ACG and National 
SMART Grant programs. The HEA continues to provide that permanent 
residents and certain other categories of noncitizens may be eligible 
for the other title IV, HEA programs, including the Federal Pell Grant 
Program.
    Regulations: This section provides that only students who are 
United States citizens are eligible to receive ACG and National SMART 
Grants.
    Reason: The regulations implement the statutory requirement that an 
eligible student for the ACG and National SMART Grant Programs must be 
a United States citizen.
Section 668.35 Student Debts Under the HEA and to the U.S.
    Regulations: This section provides that a student is not liable for 
an ACG or National SMART Grant overpayment in an award year if the 
institution can eliminate the overpayment by adjusting subsequent title 
IV, HEA program payments, excluding Federal Pell Grant, ACG, or 
National SMART Grant monies, in that same award year. If the 
overpayment cannot be eliminated by adjusting subsequent title IV, HEA 
program payments, a student is still not liable for an ACG or National 
SMART Grant overpayment if the overpayment can be eliminated by 
adjusting subsequent ACG or National SMART Grant payments, as 
appropriate, in that same award year.
    Reason: These regulations detail the requirements for institutions 
to follow when resolving overpayments to students under the ACG and 
National SMART Grant programs. These requirements are similar to the 
requirements in the Federal Pell Grant Program but also account for the 
requirement in section 401A(d) of the HEA that the amount of an ACG or 
National SMART Grant award to a student must be adjusted in relation to 
other aid received and the student's expected family contribution.

Part 691--Academic Competitiveness Grant (ACG) and National Science and 
Mathematics Access To Retain Talent Grant (National SMART Grant) 
Programs

Subpart A--Scope, Purpose and General Definitions

Section 691.2 Definitions
Eligible Major
    Statute: Section 401A(c)(3)(C)(i) of the HEA requires a student to 
pursue a major in the physical, life, or computer sciences, 
mathematics, technology, engineering, or a critical foreign language in 
order to be eligible for a National SMART Grant.
    Regulations: Section 691.2(d) provides a definition of eligible 
major for purposes of the National SMART Grant Program. An eligible 
major, as determined by the Secretary under Sec.  691.17, is a major in 
one of the physical, life, or computer sciences, mathematics, 
technology, engineering or a critical foreign language.
    Reason: This section implements the statutory requirement that, to 
qualify as an eligible student for a National SMART Grant, a student 
must major in one of the physical, life, or computer sciences, 
mathematics, technology, engineering, or a critical foreign language.
Eligible Program
    Statute: Section 401A(c)(3) of the HEA requires that an eligible 
student be enrolled or accepted for enrollment in an undergraduate 
program at a two- or four-year degree-granting institution of higher 
education to be eligible for an ACG or in a four-year degree-granting 
institution of higher education to be eligible for a National SMART 
Grant.
    Regulations: This section adds a definition of eligible program in 
Sec.  691.2(d). An eligible program is an eligible program as defined 
in 34 CFR 668.8 that, for the ACG Program, leads to an associate's or 
bachelor's degree, is a two-academic-year program acceptable for full 
credit toward a bachelor's degree, or is a graduate degree program that 
includes at least three academic years of undergraduate education or, 
for the National SMART Grant Program, leads to a bachelor's degree in 
an eligible major or is a graduate degree program in an eligible major 
that includes at least three academic years of undergraduate education.
    Reason: These provisions are necessary to implement the statute and 
to ensure eligibility for students enrolled in combined undergraduate/
graduate programs with at least three years of undergraduate study.
Section 691.6 Duration of Student Eligibility--Undergraduate Course of 
Study
    Statute: Under section 401A(d)(2)(B) of the HEA, an eligible 
student may only receive one ACG for each of the first two academic 
years of an undergraduate program and one National SMART Grant for each 
of the third and fourth academic years of a bachelor's degree program.
    Regulations: This section sets forth the duration of student 
eligibility for the ACG and National SMART Grant programs by academic 
year and restricts a student to one grant for each of his or her first, 
second, third, or fourth academic years of enrollment in an eligible 
program.
    Reason: Unlike the Federal Pell Grant Program, student eligibility 
under the ACG and National SMART Grant programs is based on the 
specific academic years of the student's eligible program rather than 
award years or completion of a bachelor's degree.

[[Page 37992]]

Section 691.7 Institutional Participation
    Statute: Section 401A(c)(2) of the HEA provides that a student must 
be eligible for a Federal Pell Grant to qualify for an ACG or National 
SMART Grant.
    Regulations: In general, the interim final regulations mirror the 
Federal Pell Grant program participation requirements. In addition, the 
interim final regulations require an institution that participates in 
the Federal Pell Grant Program and offers an educational program that 
is an eligible program for the ACG or National SMART Grant programs, to 
participate in the ACG and National SMART Grant programs, as 
applicable. A coordinating technical amendment is also being made to 34 
CFR 690.7 of the Federal Pell Grant Program regulations to require that 
an institution may not participate in the Federal Pell Grant Program if 
it has at least one eligible program under Sec.  691.2(d) and does not 
participate in the ACG or National SMART Grant programs, as applicable.
    Reason: An otherwise eligible student must be eligible for a 
Federal Pell Grant to receive an ACG or National SMART Grant. The 
Secretary believes that mandating institutional participation in all 
three programs when eligible programs are offered at an institution is 
consistent with the statute's requirement that the Secretary award 
grants to Pell-eligible students.
Section 691.8 Enrollment Status for Students Taking Regular and 
Correspondence Courses
    Statute: Section 401A(c) of the HEA provides that a student must be 
a full-time student to be eligible for an ACG or National SMART Grant.
    Regulations: This section sets forth the circumstances under which 
correspondence courses may be applied toward a student's full-time 
enrollment status in a noncorrespondence study program. The interim 
final regulations in Sec.  691.8(a) and (b) duplicate the Federal Pell 
Grant Program regulations with respect to correspondence work that can 
be included in determining a student's enrollment status. Section 
691.8(c), however, provides that a student taking correspondence 
courses is considered a full-time student if the student is taking 
coursework that is commensurate with the institution's standard for 
full-time students and the student's noncorrespondence coursework 
constitutes at least one-half of the institution's required minimum 
coursework for full-time students.
    Reason: These provisions are necessary to clarify what is required 
for determining whether a student taking correspondence courses is 
considered full-time. The Secretary believes these provisions are 
consistent with 34 CFR 690.8 of the Federal Pell Grant Program 
regulations under which the enrollment status of a student taking only 
correspondence study is never greater than half-time. Section 691.8(c) 
of these interim final regulations is consistent with 34 CFR 
690.8(b)(3) of the Federal Pell Grant Program regulations in that it 
ensures that a student is enrolled in noncorrespondence coursework that 
is at least one-half of the minimum coursework to qualify as a full-
time student.
Section 691.11 Payments From More Than One Institution
    Regulations: This section addresses the situation in which a 
student attends more than one institution and requires a student to 
receive an ACG or National SMART Grant from the same institution that 
awards the student his or her Federal Pell Grant.
    Reason: Under the Federal Pell Grant Program, a student cannot 
receive payments from more than one institution or from the Secretary 
and an institution at the same time. To ensure coordination with the 
Federal Pell Grant Program, these regulations provide that a student 
can only receive an ACG or National SMART Grant from the same 
institution that awards the student's Federal Pell Grant.

Subpart B--Application Procedures

Section 691.12 Application
    Statute: Section 401A(c) of the HEA provides the student 
eligibility requirements for the ACG and National SMART Grants. Section 
401A(c)(3)(A) and (B) of the HEA requires that a student successfully 
complete a rigorous secondary school program of study to receive an 
ACG.
    Regulations: This section specifies the procedures that a student 
must follow when applying for an ACG or National SMART Grant, and in 
particular, requires that a student must submit a Free Application for 
Federal Student Aid (FAFSA). The interim final regulations provide that 
a student may be required to provide additional information in the 
application, including information about the rigorous secondary school 
program of study that the student completed to qualify for an ACG.
    Reason: Under section 483(a) of the HEA, the FAFSA is the standard 
form used by all students applying for title IV, HEA program aid, 
including Federal Pell Grants and these programs. Use of this form and 
procedures that are similar to the Federal Pell Grant Program will 
facilitate students' completion and institutions' use of the FAFSA for 
the ACG and National SMART Grant programs.
Section 691.15 Eligibility To Receive a Grant
General Requirements
    Statute: Section 401A(c) of the HEA provides student eligibility 
requirements for the ACG and National SMART Grant programs.
    Regulations: Section 691.15(a) of these interim final regulations 
sets forth the ACG and National SMART Grant student eligibility 
requirements common to both programs including United States 
citizenship, full-time enrollment, and receipt of a Federal Pell Grant 
in the payment period that a student receives an ACG or National SMART 
Grant.
    Reason: This section implements the statutory provision that, to be 
eligible to receive an ACG or National SMART Grant, a student must 
establish eligibility for assistance under the title IV, HEA programs 
and establish that he or she is a United States citizen, is enrolled 
full-time, and is eligible for a Federal Pell Grant. The Secretary 
believes that the institution's determination that a student will 
receive a Federal Pell Grant is the best way to demonstrate that a 
student is Pell-eligible for purposes of the ACG and National SMART 
Grant programs.
Academic Year in College
    Statute: Section 401A(c)(3)(A), (B), and (C) of the HEA ties a 
student's eligibility for a grant to the student's enrollment in the 
first, second, third, and fourth academic years of a program of 
undergraduate education.
    Regulations: The interim final regulations provide that a student 
may receive an ACG during the first and second academic years of an 
eligible program of undergraduate education and may receive a National 
SMART Grant during the third and fourth academic years of an eligible 
program of undergraduate education. Section 691.15(b)(1)(iii)(B) 
further provides that, for an eligible student to receive an ACG for 
the student's second academic year, the student must have successfully 
completed the first academic year. There is a parallel provision for 
eligibility for the fourth academic year of the National SMART Grant 
program in Sec.  691.15(c)(5). Thus, for a student to receive a second-
year ACG, for example, a student must be enrolled in the second 
academic year of the student's eligible

[[Page 37993]]

program, after successfully completing the credit or clock hours and 
weeks of instructional time of the first academic year, consistent with 
34 CFR 668.3.
    Reason: The interim final regulations implement the statutory 
requirement that a student's eligibility for an ACG or National SMART 
Grant is based, in part, on the student's academic year of enrollment. 
The term ``academic year'' as used in these interim final regulations 
is the title IV, HEA program academic year as defined by the 
institution for an eligible program under the Student Assistance 
General Provisions regulations (34 CFR 668.3) and in accordance with 
section 481(a) of the HEA as amended by the HERA. In addition to being 
consistent with the other title IV, HEA programs, using this definition 
will allow the Secretary to provide assistance to qualified Federal 
Pell Grant recipients as early as possible as they progress through 
their educational program.
    The Secretary is specifying in the interim final regulations that a 
student applying for an ACG in his or her second academic year or a 
student applying for a National SMART Grant in his or her fourth 
academic year must have successfully completed the first and third 
academic years, respectively. The Secretary believes that a student 
should not be considered to have completed the credit or clock hours of 
an academic year for an ACG or National SMART Grant unless the student 
successfully completes, i.e., passes and earns, the credits or hours in 
the title IV, HEA academic year.
Grade Point Average (GPA)
    Statute: Section 401A(c)(3)(B) and (C) of the HEA provides that a 
student's eligibility for a grant is based, in part, on the student 
obtaining a cumulative GPA of at least 3.0 (or the equivalent as 
determined by the Secretary) in his or her first academic year of an 
educational program for a second-year ACG and in the coursework 
required for the student's major for a National SMART Grant.
    Regulations: Under Sec.  691.15(b)(1)(iii)(C), to receive an ACG in 
the second academic year, a student must successfully complete the 
first academic year of his or her eligible program and obtain a 
cumulative GPA of at least a 3.0 on a 4.0 scale, or the equivalent, as 
determined by the institution for other academic and title IV, HEA 
program purposes. Similarly, to receive a National SMART Grant, under 
Sec.  691.15(c)(3), a student must maintain at least a 3.0 on a 4.0 
scale, or the equivalent, cumulative GPA through the most recently 
completed payment period in the coursework required for a student's 
eligible program. For both programs, calculation of a student's GPA for 
purposes of eligibility for an ACG or National SMART Grant must be done 
consistent with other institutional measures for academic and title IV, 
HEA program purposes.
    In the case of a transfer student, Sec.  690.15(e) of the interim 
final regulations provides that an institution must rely on the grades 
of the courses from the prior institution that the institution accepts 
toward the student's eligible program for the first payment period. Use 
of grades from any prior institution to determine a student's GPA will 
be optional for the second and subsequent payment periods.
    Reason: The Secretary believes that, in general, a student's GPA 
used to determine eligibility for an ACG or National SMART Grant should 
be determined by the institution under the same standards as are used 
to calculate a GPA for other academic and title IV, HEA program 
purposes at the institution. This requirement provides consistency and 
reduces the administrative burden on institutions. In the case of a 
National SMART Grant, the Secretary has determined that a student must 
meet the GPA requirement based on all the courses required for the 
student's eligible program, not just those courses required for the 
eligible major. The Secretary believes this is appropriate because this 
approach will minimize the burden on institutions when determining 
whether a student meets the GPA requirement.
    To ensure that a transfer student may qualify for a grant in his or 
her first payment period at an institution to which the student has 
transferred, the institution to which the student transfers must take 
into account the grades in coursework taken at any prior institution 
that the institution accepts on transfer towards the student's eligible 
program in calculating a GPA to determine the student's eligibility. 
The Secretary believes it is appropriate to make consideration of 
transfer credits optional in the second and subsequent payment periods 
at the institution to which the student has transferred because the 
student will then have established a GPA with coursework taken at the 
institution to which the student transferred after the first payment 
period. The institution may then follow its standards for academic and 
title IV, HEA program purposes without any further exceptional 
treatment for the transfer student.
Prior Enrollment in a Postsecondary Educational Program
    Statute: Section 401A(c)(3)(A)(ii) of the HEA provides that a 
student is not eligible for an ACG in the student's first academic year 
of enrollment in an eligible program if the student previously enrolled 
in a program of undergraduate education.
    Regulations: Under Sec.  691.15(b)(1)(ii)(B) of the interim final 
regulations, a student is not eligible for an ACG in the student's 
first academic year if the student previously enrolled as a regular 
student in a program of undergraduate education.
    Reason: The Secretary believes that it is appropriate to clarify 
that a student is considered to have been enrolled in an undergraduate 
program if the student was admitted into the program as a regular 
student, as defined in 34 CFR 660.2. The term ``regular student'' is 
defined as ``a person who is enrolled or accepted for enrollment at an 
institution for the purpose of obtaining a degree, certificate, or 
other recognized educational credential offered by that institution.'' 
A student is not disqualified from eligibility for a first-year ACG 
based on his or her enrollment in college courses while in high school 
if that student had not been enrolled by the college for the purpose of 
obtaining a degree, certificate, or other recognized educational 
credential offered by the college. A student who was enrolled in a 
postsecondary program leading to a degree, certificate, or other 
recognized educational credential while enrolled in high school is not 
eligible for a first-year ACG. Under Sec. Sec.  101 and 102 of the HEA, 
a postsecondary institution that enrolls high school students who are 
not beyond the age of compulsory school attendance as regular students 
is not eligible for title IV, HEA aid. Thus, an institution that admits 
students as regular students who are in high school and are not beyond 
the age of compulsory school attendance endangers both its 
institutional eligibility and the eligibility of all students at the 
institution for aid under all title IV, HEA programs.
    A student's enrollment in a payment period during his or her first 
academic year of enrollment in an eligible program does not render that 
student ineligible for an ACG during a subsequent payment period during 
the first academic year if the student is otherwise eligible for an 
ACG. For example, a student graduates from high school in May 2006. In 
September 2006, the student enrolls for the fall semester as a half-
time student but is otherwise

[[Page 37994]]

eligible for an ACG. In January 2007, the student begins the second 
semester as a full-time student. The student would not be considered to 
have been previously enrolled in another postsecondary program under 
this provision and would be eligible in the second semester for an ACG 
payment from the student's first-year ACG Scheduled Award.
Documenting Completion of a Rigorous Secondary School Program of Study
    Statute: Section 401A(c)(3)(A)(i) and (B)(i) of the HEA requires 
that, to receive an ACG, a student must have successfully completed a 
rigorous secondary school program of study, as recognized by the 
Secretary.
    Regulations: Under Sec.  691.15(b)(2) of the interim final 
regulations, an institution is required to document a student's 
completion of a rigorous secondary school program of study using 
documentation from the appropriate cognizant authority provided by that 
authority or the student. Section 691.15(b)(3) of the interim final 
regulations provides that for a home-schooled student, the student's 
parent or guardian is the cognizant authority for purposes of providing 
documentation of the student's completion of a rigorous program of 
study. Such documentation would include a transcript or its equivalent 
or, alternatively, a detailed course description listing the secondary 
school courses completed by the student. In the case of a transfer 
student, Sec.  691.15(b)(4) of the interim final regulations provides 
that an institution may rely on documentation of a prior institution's 
determination that a student completed a rigorous secondary school 
program of study. Such determination can be documentation of a 
student's receipt of an ACG from a prior institution.
    Reason: The Secretary believes that, in determining a student's 
eligibility under the rigorous secondary school program of study 
requirement, the institution must obtain documentation that the student 
has completed such a course of study from the cognizant authority. The 
student or the cognizant authority may provide the documentation. To 
maintain the integrity of the application process, the Secretary is 
requiring that, if an institution has reason to believe that 
documentation provided by a student is incomplete or inaccurate, an 
institution must use documentation provided to it directly from the 
cognizant authority.
    With respect to home-schooled students, the Secretary is aware that 
parents or a student's guardian are the cognizant authority for home-
schooled students and is providing for this circumstance in Sec.  
691.15(b)(3) of these interim final regulations.
    In the case of a transfer student, the Secretary believes that an 
institution's reliance on a prior institution's determination and 
documentation of the student's rigorous secondary school program of 
study provides sufficient assurance of the student's eligibility and 
reduces institutional burden. This documentation may be documentation 
of the student's receipt of an ACG at a prior eligible institution.
Declaring an Eligible Major
    Statute: Section 401A(c)(3)(C)(i) of the HEA requires that a 
student must major in one of the physical, life, or computer sciences, 
mathematics, technology, engineering, or in a critical foreign language 
to be eligible for a National SMART Grant.
    Regulations: To be eligible for a National SMART Grant, Sec.  
691.15(c)(2) of the interim final regulations requires that a student 
must formally declare his or her eligible major in accordance with the 
institution's academic requirements. However, if under an institution's 
procedures, a student would not be able to formally declare a major in 
time to qualify for a National SMART Grant, the student must 
demonstrate his or her intent to declare an eligible major as 
documented by the institution. As soon as the student is able to 
formally declare a major, the student must do so in order to remain 
eligible for a National SMART Grant. In all cases, the student must 
enroll in the courses necessary to complete the degree program and to 
fulfill the major requirements.
    Reason: The Secretary believes the best assurance that a student is 
pursuing an eligible major is obtained by a student formally declaring 
his or her eligible major in accordance with the institution's academic 
requirements. The Secretary is aware, however, that in some instances, 
under institutional academic policies, a student is not allowed to 
declare his or her major early enough to qualify for a National SMART 
Grant. The Secretary is, therefore, providing an alternative means for 
students to qualify as having an eligible major. Under this alternative 
approach, a student may demonstrate his or her intent to declare an 
eligible major in accordance with the institution's academic 
requirements. However, to ensure the integrity of the program, the 
Secretary believes that it is important that the student formally 
declare an eligible major as soon as the student is allowed. Whether 
the student has formally declared a major or is covered by the 
alternative approach, the student also must enroll in the courses 
needed both to complete the student's eligible program and to fulfill 
the intended eligible major's requirements. The Secretary believes this 
additional requirement fulfills the statutory requirement because it 
further documents the student's pursuit of an eligible major.
Section 691.16 Recognition of a Rigorous Secondary School Program of 
Study
    Statute: Section 401A(f) of the HEA requires the Secretary to 
recognize at least one rigorous secondary school program of study in 
each State to determine student eligibility for an ACG. Section 
401A(c)(3)(A) and (B) provides that a rigorous secondary school program 
of study is established by an SEA or LEA.
    Regulations: The interim final regulations provide that, for an 
award year, the Secretary recognizes at least one rigorous secondary 
school program of study in each State identified by an SEA or by an LEA 
that can document that it is legally authorized by the State to 
establish a separate secondary school program of study. In identifying 
secondary school programs of study that it considers rigorous, an SEA 
or LEA must consider programs that are offered at public, charter, 
private, tribal, and home schools, prepare students to succeed in 
postsecondary education, and are not General Education Development 
(GED) Certificate programs. The Secretary believes that GED programs do 
not ensure the necessary academic achievement to be considered rigorous 
secondary school programs of study.
    In these interim final regulations, the Secretary is recognizing 
certain secondary school programs of study as rigorous that are in 
addition to any that may subsequently be explicitly identified by SEAs 
and LEAs and recognized by the Secretary. These additional programs 
include existing advanced and honors programs established by States and 
a set of courses identified under the State Scholars Initiative 
sponsored by the Western Interstate Commission for Higher Education 
(WICHE). In addition, an individual student may be considered to have 
completed a rigorous secondary school program of study, regardless of 
the school or program attended, if the individual student successfully 
completes a set of courses similar to those required under the State 
Scholars Initiative. An individual student may also be considered to 
have completed a rigorous secondary school

[[Page 37995]]

program of study, regardless of the school or program attended, if the 
individual student completes courses in the International Baccalaureate 
Diploma Program or the College Board's Advanced Placement Program and 
attains at least a minimum score, consistent with Sec.  691.16(d)(4) 
and (5), respectively, on the examinations for those courses. The 
interim final regulations also provide for publication by the Secretary 
of a list of recognized rigorous secondary school programs of study for 
each award year.
    Reason: The interim final regulations in this section are necessary 
to implement the statutory requirement that the Secretary recognizes at 
least one rigorous secondary school program of study in each State. 
While SEAs and LEAs may submit secondary school programs of study for 
the Secretary to recognize as rigorous, there is no requirement that 
SEAs or LEAs take such action. The Secretary, however, is under a 
mandate to recognize at least one program in each State as rigorous. To 
fulfill this mandate, the Secretary has identified several programs 
that the Secretary recognizes as rigorous secondary school programs of 
study in addition to any that may subsequently be explicitly identified 
by SEAs and LEAs and recognized by the Secretary. Recognizing these 
programs as rigorous in these interim final regulations will ensure 
that deserving students will be able to establish their eligibility for 
an ACG. The Secretary has made an initial determination that these 
particular programs indicate that a student is adequately prepared to 
pursue postsecondary education successfully. With respect to existing 
advanced or honors programs established by States, the Secretary has 
determined that, based on their composition, these programs inherently 
qualify as rigorous secondary school programs of study. Both the set of 
courses identified under the State Scholars Initiative and the set of 
similar courses prescribed in Sec.  691.16(d)(2) of these interim final 
regulations are patterned after the recommendations for the essentials 
of a strong curriculum in the National Commission on Excellence in 
Education's report A Nation at Risk: The Imperative for Educational 
Reform, available on the Department's Web site at https://www.ed.gov/
pubs/NatAtRisk/. As a result, the Secretary has determined 
that completing the courses of these secondary programs of study 
establishes that a student has completed a rigorous secondary school 
program of study.
    With respect to completing courses in the International 
Baccalaureate Diploma Program or the College Board's Advanced Placement 
Program and attaining at least a minimum score, the Secretary has 
determined that completing these courses with the prescribed minimum 
score establishes that a student has attained a level of ability in 
completing his or her secondary school program that is commensurate 
with completing a rigorous secondary school program of study.
    To ensure a wide distribution of the list of recognized programs 
for each award year, the Secretary will make the list available through 
a number of means, including to students applying using FAFSA on the 
Web, the Department's websites, and through Dear Colleague letters and 
other appropriate media.
Section 691.17 Determination of Eligible Majors
Eligible Major
    Statute: Section 401A(c)(3)(C)(i) of the HEA provides that a 
student may receive a National SMART Grant if the student is pursuing a 
major, as determined by the Secretary, in the physical, life, or 
computer sciences, mathematics, technology, engineering, or a critical 
foreign language.
    Regulations: Section 691.17(a) of the interim final regulations 
provides that, for each award year, the Secretary identifies the 
eligible majors in the physical, life, or computer sciences, 
mathematics, technology, engineering, and, after consulting with the 
Director of National Intelligence, critical foreign languages.
    Reason: This section implements the statutory provision that the 
Secretary determine eligible majors in the physical, life, and computer 
sciences, mathematics, technology, engineering, and, after consulting 
with the Director of National Intelligence, critical foreign languages. 
The Secretary will publish a list of eligible majors by Classification 
of Instructional Program (CIP) codes to provide a standardized method 
of identifying eligible majors. The Secretary believes that no 
significant additional burden will be imposed on institutions because 
they already use CIP codes.
    To ensure wide distribution of the list of eligible majors for each 
award year, the Secretary will make the list available on the 
Department's Web Sites, through Dear Colleague letters, and through 
other appropriate media.
Duration of Eligible Major
    Statute: Section 401A(c)(3)(C)(i) of the HEA provides that a 
student may receive a National SMART Grant if the student is pursuing a 
major, as determined by the Secretary, in the physical, life, or 
computer sciences, mathematics, technology, engineering, or a critical 
foreign language.
    Regulations: Section 691.17(c) of the interim final regulations 
provides that an eligible major for an award year remains an eligible 
major in subsequent award years for a student who majored in that 
eligible major and received a National SMART Grant in the award year in 
which the major was an eligible major, even if that major is no longer 
listed as an eligible major in subsequent award years during which the 
student is otherwise eligible for a National SMART Grant.
    Reason: The Secretary believes that a student who started a third 
academic year, or a portion of a fourth academic year, in an eligible 
major that ceases to be listed as an eligible major during a later 
award year should not be penalized for this change. The regulations 
provide that a student in this situation remains eligible to receive a 
National SMART Grant, provided he or she continues to meet the other 
eligibility requirements.

Subpart F--Determination of Awards

Section 691.62 Calculation of a Grant
Maximum Award
    Statute: Section 401A(d)(1)(A) of the HEA establishes the grant 
amount that an eligible student can receive for each academic year of 
eligibility for an ACG or National SMART Grant. Section 
401A(d)(1)(B)(ii) of the HEA authorizes the Secretary to ratably reduce 
the maximum grant amounts for both programs when the funds available 
for a given fiscal year are less than the amount needed to fund full 
awards for all eligible students.
    Regulations: The interim final regulations provide that the 
Secretary establishes and announces the ACG and National SMART Grant 
Scheduled Awards each award year and sets forth the maximum grant 
amounts for each program for each academic year of eligibility for a 
student as set forth in the statute. The interim final regulations also 
provide that the Secretary may revise the maximum award during an award 
year based on the availability of funds.
    Reason: The Secretary establishes the ACG and National SMART Grant 
Scheduled Awards based on the availability of funds appropriated and 
the anticipated number of eligible students. If funds are insufficient 
to support these amounts, the ACG and National SMART Grant Scheduled 
Awards are ratably reduced from the

[[Page 37996]]

statutory maximums for both programs for all academic years of 
enrollment. To ensure that all eligible students receive an award, we 
also are providing that the Secretary may further revise the ACG and 
National SMART Grant Scheduled Awards during an award year.
Treatment in Relation to Other Aid Received
    Statute: Section 401A(d)(1)(B)(i) of the HEA provides that the 
grant amount may not exceed the student's cost of attendance when 
combined with the student's Federal Pell Grant and other student 
financial assistance.
    Regulations: Section 691.62(c) of the interim final regulations 
provides that a student's ACG or National SMART Grant, when combined 
with a student's expected family contribution determined under title 
IV, part F of the HEA and estimated financial assistance as defined in 
34 CFR 673.5(c), 682.200(b), and 685.102(b), may not exceed a student's 
cost of attendance under section 472 of the HEA.
    Reason: ACG and National SMART Grants are need-based grants. Need-
based grant assistance cannot replace a family's expected contribution 
toward a student's postsecondary expenses.
Section 691.63 Calculation of a Grant for a Payment Period
General
    Statute: Section 401A(d)(1)(A) of the HEA specifies the amount of a 
grant a student may receive for an academic year.
    Regulations: The interim final regulations detail how an 
institution calculates an ACG or National SMART Grant payment for a 
payment period for an eligible student depending on the academic 
calendar of the eligible program and the amount of the student's ACG or 
National SMART Grant Scheduled Award.
    Reason: As is the case with the Federal Pell Grant Program, a 
student's award for an ACG or National SMART Grant is considered to be 
awarded across a title IV, HEA academic year. The interim final 
regulations for this section follow the corresponding Federal Pell 
Grant Program regulations in 34 CFR 690.63 for calculating payments for 
payment periods to distribute a student's award across a title, IV HEA 
academic year. Because students enrolled in a program of study offered 
by correspondence are not eligible for ACG or National SMART Grants 
because these students are not full-time, the Secretary is not 
including in part 691 the Federal Pell Grant Program provisions in 34 
CFR 690.66, regarding calculation of a payment for a payment period for 
programs of study offered by correspondence.
Calculation of a Grant for a Payment Period That Applies to Two 
Academic Years
    Regulations: Under the interim final regulations, if a student is 
completing the remaining portion of an academic year in a payment 
period, the student's payment is calculated using the ACG or National 
SMART Grant Scheduled Award of the academic year being completed.
    Reason: In certain circumstances, a student may be completing in a 
payment period the coursework for an academic year while also beginning 
to take coursework applicable to the next academic year for which the 
student may qualify for another ACG or National SMART Grant Scheduled 
Award. These interim final regulations provide that the student's 
payment for a payment period is calculated based on the ACG or National 
SMART Grant Scheduled Award for the academic year that the student is 
completing. The Secretary believes this provision is necessary to 
provide guidance to institutions in calculating a student's payment for 
the payment period in this circumstance and to ensure that eligible 
students receive their awards.
Section 691.64 Calculation of a Grant for a Payment Period Which Occurs 
in Two Award Years
    Regulations: This section addresses how an institution calculates 
an ACG or National SMART Grant payment for an eligible student's 
payment period when the student is enrolled in a payment period that 
overlaps two award years. These interim final regulations are the same 
as in 34 CFR 690.64 of the Federal Pell Grant Program regulations, 
except for Sec.  691.64(a)(6), which provides that a student's ACG or 
National Smart Grant must be assigned to the same award year as the 
student's Federal Pell Grant and Sec.  691.64(b), which prohibits a 
student from receiving more than his or her ACG or National SMART Grant 
Scheduled Award for an academic year.
    Reason: The requirement in Sec.  691.64(a)(6) is necessary to 
coordinate these provisions with the student eligibility requirement in 
Sec.  691.15(a)(2) that a student be receiving a Federal Pell Grant in 
a payment period in order to be eligible for an ACG or National SMART 
Grant payment. The institution must assign a payment period for an ACG 
or National SMART Grant that occurs in two award years to the same 
award year that it assigns to the student's Federal Pell Grant. In 
addition, Sec.  691.64(b) clarifies that, unlike the Federal Pell Grant 
Program, a student's ACG or National SMART Grant Scheduled Award is 
based only on completing an academic year of the student's eligible 
program, rather than completing an academic year within an award year, 
as in the Federal Pell Grant Program.
Section 691.65 Transfer Student: Attendance at More Than One 
Institution During an Academic Year
    Regulations: This section specifies how an institution calculates 
an ACG or National SMART Grant payment for an eligible student who 
transfers from another postsecondary institution within the same award 
year. The interim final regulations are similar to the corresponding 
provisions in 34 CFR 690.65 under the Federal Pell Grant Program 
regulations with one exception. The Secretary is adding paragraph 
(a)(2) to provide that a transfer student must receive a Federal Pell 
Grant in the same payment period to be an eligible ACG or National 
SMART Grant recipient at the second institution.
    Reason: This provision coordinates these interim final regulations 
with the student eligibility requirement in Sec.  691.15(a)(2) that a 
student be receiving a Federal Pell Grant in a payment period in order 
to be eligible for an ACG or National SMART Grant payment.

Subpart G--Administration of Grant Payments

Section 691.75 Determination of Eligibility for Payment GPA and 
Declaration of a Major
    Statute: Section 401A(c) of the HEA provides the student 
eligibility requirements for the ACG and National SMART Grants.
    Regulations: This section specifies the requirements that govern an 
institution's determination of a student's eligibility for a 
disbursement of an ACG or National SMART Grant. These interim final 
regulations are similar to those in 34 CFR 690.75 of the Federal Pell 
Grant Program to the extent practicable. Similar to the Federal Pell 
Grant Program requirements for determinations of a student's 
satisfactory academic progress, these interim final regulations add 
provisions for the treatment of institutional determinations for a 
payment period regarding changes in a student's GPA and, for National 
SMART Grants, a student's major.
    Reason: A student's GPA may change during the course of a payment 
period, depending on when grades are earned or posted. Similarly, a 
student may declare

[[Page 37997]]

an eligible major during a payment period. These provisions provide 
institutions the flexibility to reconsider a student's eligibility for 
an ACG or National SMART Grant payment during a payment period.
Payments for Nonterm Self-Paced Programs
    Regulations: Section 691.75(a)(3) provides that a student enrolled 
in a nonterm self-paced program may not receive a disbursement for a 
payment period until the student completes at least 50 percent of the 
credit or clock hours, or the academic coursework, in the payment 
period at the rate of academic progress of a full-time student. Section 
691.75(e) describes a self-paced program for purposes of this section 
as one that allows a student to complete coursework without a defined 
academic schedule or to enroll in courses within a program at either 
defined dates or optional start dates without a defined schedule for 
completing the program.
    Reason: Unlike term-based programs and nonterm programs with 
defined academic schedules, a student's enrollment status in a self-
paced program may vary from that of other students in that program 
depending on the rate of academic progress the individual student is 
making in completing the credit or clock hours in the program.
    This varying rate of academic progress is already addressed in the 
Federal Pell Grant Program regulations governing calculation of 
payments for payment periods, 34 CFR 690.63(e), and Sec.  691.63(e) of 
these interim final regulations. For the numerator of the fraction in 
34 CFR 690.63(e)(2)(i) and Sec.  691.63(e)(3)(i) of these interim final 
regulations, an institution must determine the weeks of instructional 
time for full-time students in a program, using credit hours without 
terms or clock hours, to complete the lesser of the credit or clock 
hours in the program or the title IV, HEA academic year. For nonterm 
self-paced programs, institutions must distinguish between part-time 
students and full-time students to arrive at a proper value for the 
numerator in this fraction and determine the number of weeks of 
instructional time necessary for most full-time students enrolled in 
the program to complete the lesser of the credit or clock hours in the 
program or the academic year. Although an institution, to calculate a 
payment for the payment period, must determine this value based on the 
behavior of full-time students enrolled in the program, this value is 
used for the payment period calculations for all students in an 
eligible program regardless of each student's enrollment status. Thus, 
the calculations of payments for payment periods for clock-hour and 
nonterm credit-hour programs do not provide any assurance regarding an 
individual student's enrollment status.
    Under the definition of a payment period in 34 CFR 668.4(b) and 
(c), a student may not progress to the next payment period unless the 
student completes the clock hours in the payment period or, for a 
credit-hour program, the credit hours and the weeks of instructional 
time in the payment period. There is no requirement that the student be 
progressing at the rate of a particular enrollment status to move to 
the next payment period. Thus, progressing to the next payment period 
does not ensure that a student would be considered full-time.
    Because the existing Federal Pell Grant Program regulations 
governing payment periods and calculations of payments for payment 
periods do not ensure that a student is progressing at a full-time 
enrollment status, the Secretary believes it is necessary for an 
institution to determine that a student enrolled in a nonterm self-
paced program is progressing as a full-time student on or after the 
midpoint of the payment period in hours or coursework before making a 
disbursement to the student for that payment period. The Secretary 
believes this requirement ensures that ACG and National SMART Grant 
funds will be awarded only to full-time students.
    To clarify the programs that the Secretary believes should fall 
under these requirements, the Secretary is adding paragraph (e) to this 
section to describe nonterm programs that the Secretary considers to be 
offered in a self-paced academic calendar.
Payment Prior to Receipt of GPA
    Regulations: Under Sec.  691.75(d), an institution may make one 
disbursement for a payment period to a student whose GPA is not yet 
available as required under Sec.  691.15(b)(1)(iii)(C) and (c)(3). By 
making the disbursement, the institution assumes liability for the 
disbursement if it subsequently determines that the student's GPA was 
not eligible.
    Reason: The Secretary recognizes that a student's grades for a 
prior payment period are not always promptly available to determine the 
student's eligibility for an ACG or National SMART Grant disbursement 
for the next payment period. This provision provides the institution 
the authority to make a disbursement to a student whom it anticipates 
would be eligible, but when the student's grades for the prior payment 
period are available, if ineligible, the grant must be rescinded.
Section 691.76 Frequency of Payment
    Regulations: This section specifies how often an institution may 
pay a student. These interim final regulations are the same as the 
Federal Pell Grant Program regulations in 34 CFR 690.76 to the extent 
practicable but add that a student must have completed a prior payment 
period as a full-time student in order to receive payment in one lump 
sum for prior payment periods.
    Reason: The purpose of this section is to detail when institutions 
may disburse a payment within a payment period. These interim final 
regulations also ensure that a student has met the full-time status 
requirement, and is therefore eligible for disbursement of an ACG or 
National SMART Grant payment for a prior payment period.

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the OMB. 
Under section 3(f) of Executive Order 12866, the order defines a 
``significant regulatory action'' as an action that is likely to result 
in a rule (1) having an annual effect on the economy of $100 million or 
more, or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    Pursuant to the terms of the Executive Order, it has been 
determined that this regulatory action will have an annual effect on 
the economy of more than $100 million. Therefore, this action is 
``economically significant'' and subject to OMB review under section 
3(f)(4) of Executive Order 12866. The Secretary accordingly has 
assessed the potential costs and benefits of this regulatory action and 
has determined that the benefits justify the costs.

[[Page 37998]]

Need for Federal Regulatory Action

    As noted above, these interim final regulations are needed to 
implement two programs created in the HERA. The ACG program provides 
need-based grants to encourage students to complete a rigorous 
secondary school program of study. The National SMART Grant Program 
provides need-based grants to encourage students to major in certain 
scientific and technical fields or foreign languages deemed vital to 
national security. Section 401A(c)(3)(B)(ii) and (3)(C)(ii) of the HEA 
specifically requires the Secretary of Education to issue regulations 
implementing these programs.
    The Secretary had limited discretion in implementing these grant 
programs; the number of recipients and aid awarded is largely driven by 
statutory eligibility requirements such as that students be eligible to 
receive a Federal Pell Grant, be United States citizens, attend two-or 
four-year degree-granting institutions on a full-time basis, and, in 
some cases, maintain a 3.0 GPA. The Secretary has exercised discretion 
in the areas of program eligibility relating to the definition of a 
rigorous secondary school program of study in the case of the ACG 
Program and, for the National SMART Grant Program, the definition of 
qualifying fields of study. In both these cases, the Secretary has 
regulated to reflect clear congressional intent.

Benefits

    By facilitating the implementation of these new programs, these 
interim final regulations will support the provision of over $4 billion 
in need-based student aid over the next five years. The ACG Program 
will benefit society by providing an incentive for students to complete 
a rigorous secondary school program of study, which research indicates 
increases the likelihood of successfully completing postsecondary 
education. The National SMART Grant Program will encourage students to 
major in technical fields or critical foreign languages. In the case of 
technical fields, these majors will benefit both national and 
individual competitiveness, increasing the nation's economic security. 
For foreign languages, increases in the number of fluent speakers of 
Arabic, Farsi, Uzbek, and other critical languages would broaden 
understanding of important cultures and contribute significantly to 
ongoing efforts to combat international terrorism. In addition, awards 
under both programs serve to reduce a student's net cost of education. 
Research indicates that reduction in a student's cost of education 
correlates with increased student persistence and degree attainment. 
Data consistently show that postsecondary degree holders have 
substantially higher lifetime earnings than high school graduates.
Costs
    These programs are supported with $4.5 billion in mandatory 
appropriations: $790 million for fiscal year 2006, $850 million for 
fiscal year 2007, $920 million for fiscal year 2008, $960 million for 
2009, and $1,010 million for 2010. Funds not expended in one year may 
be carried forward to support awards in the subsequent year. If the 
estimated number of recipients exceeds the available funding for a 
given fiscal year, award levels would be ratably reduced.

                                    Table 1.--Estimated Program Participation
----------------------------------------------------------------------------------------------------------------
                                                                                                   Total amount
                                                                     Estimated    Estimated avg.  of aid awarded
                                                                     number of         award       (Expected  in
                                                                    recipients                       millions)
----------------------------------------------------------------------------------------------------------------
                                              Award Year 2006-2007
----------------------------------------------------------------------------------------------------------------
AC Grants--1st year.............................................         310,000            $657            $200
AC Grants--2nd year.............................................         110,000           1,245             140
National SMART Grants--3rd year.................................          40,000           3,718             150
National SMART Grants--4th year.................................          40,000           3,875             160
----------------------------------------------------------------------------------------------------------------
                                              Award Year 2007-2008
----------------------------------------------------------------------------------------------------------------
AC Grants--1st year.............................................         330,000             682             230
AC Grants--2nd year.............................................         130,000           1,255             160
National SMART Grants--3rd year.................................          40,000           3,718             150
National SMART Grants--4th year.................................          40,000           3,875             160
----------------------------------------------------------------------------------------------------------------

    The average awards displayed in Table 1 are less than the statutory 
maximum awards due to the cost of attendance limit on ACG and National 
SMART Grant awards. In addition, average awards also reflect students 
who are eligible for an ACG or National SMART Grant for less than the 
full award year. Figures in Table 1 may not add due to rounding.
    Because these programs are title IV, HEA programs and eligibility 
for these programs is linked to Federal Pell Grant eligibility, 
participating institutions must already meet Federal student aid 
institutional eligibility requirements. In addition, the delivery 
system and many program operational requirements for the new programs 
are patterned after those