[Federal Register Volume 71, Number 211 (Wednesday, November 1, 2006)]
[Rules and Regulations]
[Pages 64402-64419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18197]



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Part IV





Department of Education





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34 CFR Parts 668, 690, and 691



Student Assistance General Provisions; Federal Pell Grant Program; 
Academic Competitiveness Grant Program; and National Science and 
Mathematics Access to Retain Talent Grant Program; Final Rule

  Federal Register / Vol. 71, No. 211 / Wednesday, November 1, 2006 / 
Rules and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Parts 668, 690, and 691

RIN 1840-AC86


Student Assistance General Provisions; 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: Final regulations.

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SUMMARY: The Secretary is adopting as final, with changes, interim 
final regulations in: 34 CFR part 691 for the Academic Competitiveness 
Grant (ACG) and National Science and Mathematics Access to Retain 
Talent Grant (National SMART Grant) programs; 34 CFR part 668 (Student 
Assistance General Provisions); and 34 CFR part 690 (Federal Pell Grant 
Program). These final regulations are needed to implement provisions of 
the Higher Education Act of 1965 (HEA), as amended by the Higher 
Education Reconciliation Act of 2005 (HERA), Pub. L. 109-171, enacted 
on February 8, 2006, 20 U.S.C. 1070a-1.
    These 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 2007-2008 award 
year. For regulations that will 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: Effective Date: These final regulations are effective July 1, 
2007.
    Implementation Date: The Secretary has determined, in accordance 
with section 482(c)(2)(A) of the HEA (20 U.S.C. 1089(c)(2)(A)), that 
institutions of higher education (institutions), State educational 
agencies (SEAs), and local educational agencies (LEAs) that administer 
title IV, HEA programs may, at their discretion, choose to implement 
all of the provisions of these final regulations on or after November 
1, 2006, including for the 2006-2007 award year. For further 
information, see ``Implementation Date of These Regulations'' under the 
SUPPLEMENTARY INFORMATION section of this preamble.

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: On July 3, 2006, the Secretary published 
interim final regulations (71 FR 37990) implementing the ACG and 
National SMART Grant programs added to the HEA by the HERA. The interim 
final regulations were effective on August 2, 2006. At the time the 
interim final regulations were published, the Secretary requested 
public comment on whether changes to the regulations were warranted.
    The July 3, 2006, interim final regulations included a discussion 
of the major issues covered by the regulations. The following list 
summarizes those issues and identifies the pages of the preamble to the 
July 3, 2006, interim final regulations on which a discussion of those 
issues can be found:
    The Secretary repeated in the ACG and National SMART Grant 
regulations several definitions and sections from the Federal Pell 
Grant Program regulations (71 FR 37990-37991).
    The Secretary specified that only students who are United States 
citizens are eligible to receive ACG and National SMART Grants (71 FR 
37991).
    The Secretary detailed the requirements for institutions to follow 
when resolving overpayments to students under the ACG and National 
SMART Grant programs (71 FR 37991).
    The Secretary defined eligible major for purposes of the National 
SMART Grant Program (71 FR 37991).
    The Secretary defined eligible program for the ACG and National 
SMART Grant programs (71 FR 37991).
    The Secretary specified the duration of student eligibility for the 
ACG and National SMART Grant programs by academic year (71 FR 37991).
    The Secretary delineated the institutional participation 
requirements, including a requirement that 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, must participate in the ACG and National SMART 
Grant programs (71 FR 37992).
    The Secretary specified the circumstances under which 
correspondence courses may be applied toward a student's full-time 
enrollment status in a noncorrespondence study program (71 FR 37992).
    The Secretary delineated the requirements for a student to attend 
more than one institution and receive an ACG or National SMART Grant 
(71 FR 37992).
    The Secretary specified the procedures that a student must follow 
when applying for an ACG or National SMART Grant (71 FR 37992).
    The Secretary set forth the ACG and National SMART Grant general 
student eligibility requirements (71 FR 37992).
    The Secretary specified the application of an academic year to a 
student's eligibility for an ACG and National SMART Grant (71 FR 
37992).
    The Secretary provided the grade point average (GPA) requirements 
for receiving an ACG or National SMART Grant (71 FR 37993).
    The Secretary provided the circumstances under which a student is 
not eligible for an ACG in the student's first academic year of 
enrollment if the student previously enrolled in a program of 
undergraduate education (71 FR 37993-37994).
    The Secretary specified the institutional requirements for 
documenting a student's completion of a rigorous secondary school 
program of study (71 FR 37994-37995).
    The Secretary stated the student requirements for declaring an 
eligible major in order to be eligible for a National SMART Grant (71 
FR 37994).
    The Secretary provided guidelines for recognizing a rigorous 
secondary school program of study for ACG eligibility (71 FR 37994).
    The Secretary delineated how eligible majors will be determined and 
their duration for the National SMART Grant Program (71 FR 37995).
    The Secretary specified how the maximum ACG and National SMART 
Grants will be determined each year (71 FR 37995-37996).
    The Secretary stipulated how ACG and National SMART Grant funds are 
treated in relation to other aid received (71 FR 37996).
    The Secretary detailed how an institution calculates an ACG or 
National SMART Grant payment for a payment period (71 FR 37996).
    The Secretary specified how an institution calculates an ACG or 
National SMART Grant payment for a student who transfers from another 
institution (71 FR 37996).
    The Secretary detailed the requirements that govern an

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institution's determination of a student's eligibility for a 
disbursement of an ACG or National SMART Grant, including provisions 
regarding changes in a student's GPA, payment prior to receipt of a 
GPA, payments for nonterm self-paced programs, and, for National SMART 
Grants, changes to a student's major (71 FR 37996-37997).
    The Secretary specified how often an institution may pay a student 
(71 FR 37997).
    Implementation Date of These Regulations: Section 482(c) of the HEA 
requires that regulations affecting programs under title IV of the HEA 
be published in final form by November 1 prior to the start of the 
award year (July 1) to which they apply. However, that section also 
permits the Secretary to designate any regulations that an entity 
subject to the regulations may choose to implement earlier and the 
conditions under which the entity may implement the provisions early. 
The Secretary is using the authority granted to her under section 
482(c) to designate all of the regulations included in this document 
for early implementation, beginning with the 2006-2007 award year, at 
the discretion of each institution, SEA, and LEA.

Analysis of Comments and Changes

    The regulations in this document were developed through the 
analysis of comments received on the interim final regulations 
published on July 3, 2006. The Secretary invited comments on the 
interim final regulations, and we received 80 comments.
    An analysis of the comments and of the changes in the regulations 
since publication of the interim final regulations follows. We group 
major issues according to subject, with appropriate sections of the 
regulations referenced in parentheses. Generally, we do not address 
technical and other minor changes.

General Comments

    Comments: One commenter was concerned that the ACG and National 
SMART Grant program requirements would intrude on the academic policies 
of institutions with regard to credit accrual, calculation of GPA, 
determinations of academic progress, the treatment of transferred 
credits, and academic year standing. The commenter believed that 
permitting institutions to follow current business processes and 
practices would be in accord with current delivery systems and be clear 
to students.
    Discussion: The Secretary has no intention of interfering with 
institutions' academic policies and administration. Many of the program 
requirements about which the commenter is concerned are required by the 
HEA. The program requirements in the regulations are necessary to 
deliver ACGs and National SMART Grants to students and do not mandate 
any changes in institutional academic policies or administration.
    Changes: None.

Section 691.2 Definitions

    Comments: Several commenters believed that the term Scheduled Award 
is inappropriately applied to the ACG and National SMART Grant 
programs. The commenters believed that the term is confusing because 
the term relates to award year eligibility for Federal Pell Grants, 
which are payable for part-time enrollment, but is being applied to 
academic year eligibility for ACGs and National SMART Grants, which are 
payable for full-time enrollment only. Some commenters acknowledged the 
Secretary's need for a term that could be applied if the grants were 
subject to ratable reduction, but suggested that the Secretary use a 
different term. Others believed that the term would introduce 
unnecessary complexity into the ratable reduction process.
    Discussion: The Secretary believes that it is prudent to keep the 
ACG and National SMART Grant programs as similar to the Federal Pell 
Grant Program as possible within the constraints of the law. The 
Secretary believes the term Scheduled Award is appropriately applied to 
all three programs, as it refers to the amount a full-time student can 
be awarded for a full academic year, as in the Federal Pell Grant 
Program. Also, the term is appropriate as funds are allocated by award 
year, and the Secretary establishes the maximum Scheduled Award for 
that award year. Because the programs require only full-time enrollment 
as an eligibility criterion, there will not be Payment and Disbursement 
Schedules published as there are for the Federal Pell Grant Program, 
but the concept of Scheduled Award does apply with regard to such 
issues as remaining eligibility for transfer students and ratable 
reductions.
    Changes: None.
    Comments: Several commenters believed that it was unclear whether 
proprietary institutions could participate in the ACG and National 
SMART Grant programs.
    Discussion: Under the regulations, an otherwise eligible 
proprietary institution that offers an eligible program as defined in 
Sec.  691.2 may participate in the ACG and National SMART Grant 
programs. Section 691.2 specifies that these regulations use the 
definition of eligible institution in 34 CFR part 600. This definition 
includes institutions of higher education, as defined in Sec.  600.4; 
proprietary institutions, as defined in Sec.  600.5; and postsecondary 
vocational institutions, as defined in Sec.  600.6.
    Changes: None.
    Comments: Several commenters believed that title IV-eligible 
certificate programs should be included in the definition of an 
eligible program. The commenters argued that, while the law provides 
that a student must be enrolled or accepted for enrollment in a two- or 
four-year degree granting institution to be eligible for an ACG, or in 
a four-year degree granting institution to be eligible for a National 
SMART Grant, it does not prohibit a student from receiving an ACG or 
National SMART Grant for attending a certificate program offered by 
such a degree-granting institution. Many commenters asserted that 
certificate programs are just as important, if not more important, than 
degree programs to the future economic growth of States and the nation, 
and the students just as deserving of these grants as those enrolled in 
degree programs. In addition, the commenters asserted that many 
certificate programs attract the same caliber of students as those 
enrolled in degree programs. Several commenters noted that many 
students who initially seek certificates subsequently transfer into 
degree programs. A few commenters suggested including in the definition 
of eligible program certificate programs that are fully transferable 
into baccalaureate degree programs and certificate programs that are 
fully acceptable for credit toward an associate's degree. One commenter 
believed that, if certificate programs were not considered eligible 
outright, then the definition of an eligible program should include 
one-year programs that are fully acceptable for credit toward an 
associate's degree. The commenter asserted that, as with a two-year 
program that is fully acceptable for credit toward a bachelor's degree, 
the end result is an acceptable two- or four-year degree. One commenter 
noted that the Department's position is counter to the longstanding 
policy permitting an institution to designate a program as eligible for 
all title IV programs.
    Several commenters supported including in the definition of an 
eligible program graduate degree programs that include at least three 
academic years of undergraduate education. One commenter asked the 
Secretary to clarify a student's eligibility for a National SMART Grant 
if the student's

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status has changed to graduate student because he or she is in the 
fourth year of a graduate program that contains at least three 
undergraduate years. One commenter believed that the definition of an 
eligible program should not include a graduate degree program that 
includes at least three academic years of undergraduate education. The 
commenter noted that this interpretation appears broader than the 
requirements for Federal Pell Grant eligibility for programs that 
include a fifth year that counts toward a graduate degree program, 
primarily education certification. The commenter suggested that the 
regulations reference Sec.  668.8, which defines an eligible program 
for other title IV, HEA eligibility.
    Discussion: The Secretary has determined that because the HEA 
limits eligibility to a student enrolled or accepted for enrollment in 
a two- or four-year degree-granting institution, eligibility must be 
limited to two- or four-year degree programs, as defined in Sec.  
691.2. Therefore, certificate programs do not qualify as eligible 
programs for ACGs. However, a student in a two-academic-year program 
acceptable for full credit toward a bachelor's degree may qualify, 
provided he or she meets other eligibility criteria. Because only 
students attending four-year institutions are eligible for National 
SMART Grants and a student must be enrolled in the third and fourth 
academic years to be eligible, the Secretary believes that a student 
must be enrolled in at least a bachelor's degree program to be eligible 
for a National SMART Grant.
    Section 401A(c)(3)(C) of the HEA, in defining the term eligible 
student, refers to a student enrolled or accepted for enrollment in 
specific years of a program of undergraduate education. Although a 
graduate degree program that includes at least three years of 
undergraduate education may be an eligible program for ACG and National 
SMART Grant purposes, under section 401A(c) of the HEA, a student 
enrolled in such a program is eligible for an ACG or National SMART 
Grant only while the institution considers the student to be an 
undergraduate student in accordance with the definition of 
undergraduate student in Sec.  691.2. Once a student is considered to 
be a graduate student, the student is no longer eligible for a National 
SMART Grant.
    With respect to the definition of an eligible program, it is 
important to define eligibility for students enrolled in a program that 
leads directly to a graduate degree without first awarding a bachelor's 
degree. Students enrolled in these programs have a period of 
undergraduate work for which they should be eligible for ACG and 
National SMART Grant funds notwithstanding the fact that the programs 
are structured differently than the typical separate degree programs 
for undergraduate and graduate programs. For programs that start at the 
undergraduate level and lead directly to a graduate degree without 
defining when the student is considered an undergraduate and graduate 
student, the definition in Sec.  691.5 allows eligible students to 
receive the appropriate funds from these two grant programs.
    Changes: None.

Section 691.6 Duration of Student Eligibility--Undergraduate Course of 
Study

    Comments: Many commenters objected to the Department's decision to 
base the duration of eligibility on an academic year as defined for 
purposes of the title IV, HEA programs, as measured in weeks of 
instructional time and, for undergraduate programs, credit or clock 
hours. These commenters stated that using the title IV, HEA definition 
of academic year was administratively burdensome and unworkable. Some 
commenters found the definition of academic year in part 691 to be 
inconsistent with other uses of the term in administering title IV, HEA 
programs. One commenter believed that only the credit hour portion of 
the definition of academic year should be used. Commenters also were 
concerned that a student's title IV, HEA academic year may not match 
the student's grade level used in the other title IV, HEA programs such 
as the FFEL and Direct Loan programs. The commenters recommended that 
the Secretary rely on grade level progression as in the FFEL and Direct 
Loan programs to determine the first, second, third, or fourth year of 
a student's enrollment.
    Discussion: Under section 401A(c)(3) of the HEA, a student is 
eligible for an ACG in the student's ``first academic year of a program 
of undergraduate education'' and ``second academic year of a program of 
undergraduate education'' and for a National SMART Grant in the ``third 
or fourth academic year of a program of undergraduate education.'' The 
term academic year is defined in section 481(a)(2) of the HEA as 
amended by the HERA and explicitly applies to all title IV, HEA 
programs. The definition provides that an academic year contains a 
minimum number of weeks of instructional time and a minimum number of 
credit or clock hours. The Secretary has no flexibility to deviate from 
this defined term.
    Contrary to the assertions of some commenters, the Secretary 
believes that the interpretation of the term academic year in the 
regulations is not inconsistent with other title IV uses of the term. 
For example, the HEA provisions governing loan limits provide greater 
flexibility in this regard than does section 401A for ACGs and National 
SMART Grants. Specifically, section 428(b)(1)(A) of the HEA sets loan 
limits based on whether the student has ``successfully completed'' a 
``year'' of a program of undergraduate education. The Secretary has 
interpreted the term ``successfully completed the first year of a 
program of undergraduate education'' in section 428 to relate to a 
student's grade level, as determined by the institution. The Secretary 
did not, in so doing, interpret the term academic year as referring to 
the borrower's year in college. Instead, the Secretary interpreted the 
entirely different phrase ``first year.'' The Secretary has no 
flexibility to interpret section 401A in a similar fashion, because, 
unlike section 428, section 401A specifically uses the statutorily 
defined term academic year. The Secretary cannot limit the definition 
to the credit hour provisions, as was suggested by the commenters, 
because the statutory definition of academic year requires a minimum 
number of weeks of instructional time, in addition to the completion of 
a minimum number of credit or clock hours.
    Changes: None.
    Comments: Some commenters were concerned with the effect previous 
enrollment in eligible programs at other institutions and the amount of 
transfer credits accepted would have on a student's academic 
progression. One commenter questioned whether academic progression was 
based on attendance in each eligible program separately, or on the 
student's attendance in all eligible programs at any institution. 
Another commenter thought institutions should be allowed to count the 
credits that are being accepted for a transfer student in the same way 
credits are counted for other programs, rather than trying to monitor 
previous credits differently for ACGs and National SMART Grants.
    Discussion: For purposes of ACGs and National SMART Grants, a 
student's academic progression is not based on the student's enrollment 
in each eligible program separately, but rather is based on all 
eligible programs in which a student has enrolled over the course of 
the student's undergraduate education. An institution is responsible 
for determining whether any previous enrollment by a student as 
measured in

[[Page 64405]]

weeks of instructional time and hours affects the student's eligibility 
for an academic year. If the student previously received an ACG or 
National SMART Grant for an academic year, or a portion of an academic 
year, an institution must consider the student to have completed an 
eligible program through that academic year, or that portion of an 
academic year, in weeks of instructional time and hours, unless the 
institution has information to the contrary. For example, if an 
institution accepts a transfer student who has received a first-year 
ACG Scheduled Award, the institution must consider the student to have 
completed his or her first year of ACG eligibility regardless of the 
number of transfer credits the institution accepts. To the extent a 
determination does not conflict with information related to grants 
previously received, when determining the appropriate academic year for 
a transfer student, the institution may rely on the transfer credits 
accepted, along with the estimated number of weeks of instructional 
time completed in proportion to the academic year of the student's 
eligible program at the institution to which the student transferred.
    Changes: The Secretary has amended Sec.  691.6(a) and (b) to 
clarify that a student's academic year progression is based on 
attendance in all eligible programs in which the student has enrolled 
over the course of the student's undergraduate education.
    Comments: Several commenters were concerned with the treatment of 
Advanced Placement (AP) and International Baccalaureate (IB) credits 
and transfer credits. One commenter sought clarification of the 
treatment of AP and IB credits in relation to the requirement that a 
student must successfully complete the hours of an academic year along 
with the weeks of instructional time to progress to the next academic 
year. Some commenters were concerned that including AP and IB credits, 
along with transfer credits earned while enrolled in high school, would 
discourage students from taking these courses in high school if they 
resulted in a student being denied eligibility for a grant.
    Discussion: AP or IB credits accepted toward a student's eligible 
program count toward the completion of the hours of an academic year. 
Because AP and IB credits are earned based on secondary school courses 
and subsequent tests, there are no weeks of instructional time in 
postsecondary education associated with these credits. A student must 
successfully complete both measures of an academic year to progress to 
the next academic year. A student who entered college with 24 semester 
hours of AP credits toward an eligible program may be starting to earn 
hours toward completing the second academic year but would still be in 
the first academic year because, for purposes of an ACG or National 
SMART Grant, no weeks of instructional time while enrolled in an 
eligible program would have elapsed. Similarly, a student who entered 
college with 24 semester hours earned as a nonregular student in an 
undergraduate program while enrolled in high school, or possibly after 
high school, would also be in the position of starting to earn the 
second academic year of credits but would still be in the first 
academic year, because, for purposes of an ACG or National SMART Grant, 
no weeks of instructional time while enrolled in an eligible program 
would have elapsed. As a result, students will not be discouraged from 
enrolling in AP or IB courses in high school or in college courses as a 
nonregular student while in high school because doing so would not 
affect their eligibility for an ACG or National SMART Grant.
    Changes: None.
    Comment: One commenter recommended that ``grade level'' be 
determined once at the beginning of each award year and that the 
student maintain that level of eligibility for the year as long as the 
student is full-time.
    Discussion: The Secretary does not agree that the regulations 
should be changed. Although a single annual determination may simplify 
the programs' administration, it would deny an otherwise eligible 
student an additional grant if the student progresses to another 
academic year during the award year and qualifies for another Scheduled 
Award.
    Changes: None.

Section 691.7 Institutional Participation

    Comments: Several commenters believed that the requirement that an 
institution participate in the ACG and National SMART Grant programs in 
order to continue its participation in the Federal Pell Grant Program 
is an infringement on institutional autonomy and is not supported by 
the statute. Commenters noted that even in the FFEL and Direct Loan 
programs--where, similar to the Federal Pell Grant, ACG, and National 
SMART Grant programs, one part of the law encompasses several 
programs--institutional choice of participation is allowed. Several 
commenters stated that it was their understanding that the longstanding 
policy for the title IV, HEA programs allows an institution to 
designate a particular educational program as eligible for all title IV 
programs or only for some title IV, HEA programs and recommended that 
the Secretary continue this policy. With so little lead time for 
implementation, the commenters had concerns about the impact of the 
mandatory participation on an institution's administrative capability.
    Several commenters objected to the exclusion of an administrative 
cost allowance for the ACG and National SMART Grant programs, 
particularly because of the administrative burden of the required rapid 
implementation. Some commenters believed that the Secretary was acting 
inconsistently by disallowing the administrative cost allowance for the 
ACG and National SMART Grant programs, as the Secretary apparently 
otherwise considers the Federal Pell Grant, ACG and National SMART 
Grant programs, all of which fall under subpart 1 of part A, to be 
conjoined, and section 489(a) of the HEA requires the Secretary to pay 
an administrative cost allowance ``equal to $5 for each student at that 
institution who receives assistance under subpart 1 of part A.''
    Discussion: The Secretary believes that requiring an institution to 
participate in the ACG and National SMART Grant programs in order to 
participate in the Federal Pell Grant Program when eligible programs 
are offered at the institution is consistent with the statute's 
requirement that the Secretary award grants to Pell-eligible students. 
The Secretary believes that Congress intended that financially needy 
students receive all of the grants to which they are entitled under the 
HEA. Requiring institutional participation, thus, assures that students 
otherwise eligible for ACGs and National SMART Grants receive their 
awards.
    The Secretary believes that the mandatory participation in the 
Federal Pell Grant, ACG, and National SMART Grant programs is 
distinguishable from the flexibility given to institutions to choose 
whether to participate in the FFEL or Direct Loan Programs because 
needy students may be eligible for both a Federal Pell Grant and an ACG 
or a National SMART Grant concurrently, while students may only obtain 
loans under either the FFEL program or Direct Loan program during a 
term.
    Under the HEA, an institution receives an administrative cost 
allowance for each student receiving a Federal Pell Grant. Because 
students receiving ACGs and National SMART Grants are receiving Federal 
Pell Grants,

[[Page 64406]]

the institution does not receive an additional administrative cost 
allowance.
    Changes: None.

Section 691.11 Payments From More Than One Institution

    Comments: Two commenters disagreed with the requirement that the 
same school disburse Federal Pell Grant funds and ACG and National 
SMART Grant funds when a student is attending more than one institution 
under a written agreement.
    Discussion: The Secretary believes that it is appropriate to 
require that the same institution that administers a student's ACG or 
SMART Grant award administer the student's Federal Pell Grant award, 
because the programs are related in many ways. Several requirements 
related to the administration of the Federal Pell Grant Program and the 
ACG and National SMART Grant programs necessitate that the same 
institution disburse funds from these programs.
    Requirements such as that a student receive a Federal Pell Grant 
disbursement in the same award year in which the student receives an 
ACG or National SMART Grant, the requirement that an institution pay 
only on the transaction that is the valid institutional student 
information record (ISIR) (and only the institution paying the Federal 
Pell Grant will know which ISIR is the valid one), and the requirements 
related to reporting of verification records for the Federal Pell Grant 
Program make this choice necessary. The Secretary is aware that there 
may be a few situations in which a student is attending more than one 
institution under a written agreement. However, based on these factors, 
in the very limited circumstances in which different institutions would 
choose to administer and disburse funds from different title IV, HEA 
programs, the regulations under this section appropriately mandate that 
the institution that chooses to disburse Federal Pell Grant Program 
funds must also disburse the ACG and National SMART Grant funds.
    Changes: None.

Section 691.12 Application

    Comments: Several commenters recommended that the 2007-2008 Free 
Application for Federal Student Aid (FAFSA) should request the 
information for a student to self-identify that he or she has 
successfully completed a rigorous secondary school program of study as 
provided for in Sec.  691.12(b)(2).
    Discussion: The Secretary agrees that this information should be 
included on the FAFSA to the extent practicable. The 2007--2008 
electronic FAFSA form (FAFSA on the Web) collects this information, and 
students are able to provide the necessary information as a part of the 
application. More than 90 percent of all students apply electronically 
using FAFSA on the Web or through their institutions. The small 
minority of applicants using a paper FAFSA currently receive 
notification by mail or, if an e-mail address is provided, an e-mail 
that the student may call a toll-free telephone number or go to a web 
site to provide the necessary information. The 2007-2008 FAFSA has 
already been approved by OMB under the Paperwork Reduction Act, but we 
will consider future improvements to the paper FAFSA during the next 
clearance cycle.
    Changes: None.
    Comments: Two commenters recommended that the regulations clarify 
that an institution has the authority to request additional application 
information, similar to the Secretary's authority.
    Discussion: Under section 483(a) of the HEA only the Secretary has 
the authority to require a student to provide information concerning 
the student's need and eligibility for the title IV, HEA programs, and 
the Secretary is required to collect the student's information on the 
FAFSA. Institutions may not use any additional application data 
collection beyond the FAFSA to determine a student's title IV 
eligibility. However, an institution does have the authority under 34 
CFR 668.16(f) and 668.54(a)(3) of the Student Assistance General 
Provisions to require a student to provide any information or 
documentation necessary to resolve any concerns regarding a student's 
eligibility or application information as well as the authority to 
require documentation directly from a cognizant authority regarding the 
completion of a rigorous secondary school program of study under Sec.  
691.15(b)(2)(ii). The Secretary does not believe that these authorities 
need to be repeated in Sec.  691.12.
    Changes: None.
    Comments: One commenter recommended that all application 
requirements appear only in the Federal Pell Grant regulations to 
eliminate the possibility of conflicting language.
    Discussion: Section 691.12, while similar to the Federal Pell Grant 
Program regulations when possible, does include provisions specific 
only to the ACG and National SMART Grant programs. The Secretary 
believes that regulations specific to the ACG and National SMART Grant 
programs should not be included in the Federal Pell Grant Program 
regulations, as it may cause confusion.
    Changes: None.

Section 691.15 Eligibility To Receive a Grant

Citizenship
    Comments: Several commenters objected to the requirement that 
students must be U.S. citizens in order to qualify for an ACG or 
National SMART Grant. One commenter stated that preventing permanent 
residents from receiving a National SMART Grant excludes from 
consideration more than twenty percent of Federal Pell Grant recipients 
who are majoring in the National SMART Grant fields of study.
    Discussion: Section 401A(c)(1) of the HEA specifies that only U.S. 
citizens are eligible for ACG and National SMART Grants. The Secretary 
does not have the authority to change this requirement through 
regulations.
    Changes: None.
Federal Pell Grant Eligibility
    Comments: A number of commenters objected to the requirement that 
an eligible student must be receiving a Federal Pell Grant disbursement 
for the same payment period in which he or she will receive the ACG or 
National SMART Grant. They stated that the statute only requires that a 
student be eligible for a Federal Pell Grant, not receiving a Federal 
Pell Grant for the same payment period. These commenters believed that 
the Secretary exceeded her statutory authority and arbitrarily denied a 
Federal entitlement to otherwise eligible students. The commenters were 
especially concerned about eligibility for payment periods that cross 
award years, pointing out that there are various situations in which 
students who attend college year-round may have exhausted their Federal 
Pell Grant eligibility yet still have remaining eligibility for an ACG 
or National SMART Grant. For these Pell-eligible students who have 
already received a full scheduled Federal Pell Grant award, the receipt 
of an ACG or National SMART Grant may be of critical importance. In 
addition, some students attending low-cost institutions may have 
substantial outside scholarship assistance that reduces their need and 
resultant ACG or National SMART Grant during the regular fall through 
spring academic calendar, but may have unmet need during the summer 
term. Some commenters suggested that it would be more reasonable to 
define Federal Pell Grant eligibility for this purpose in terms of an 
expected family contribution (EFC) within the range for

[[Page 64407]]

a Federal Pell Grant award for the award year in which the payment 
period is placed.
    Discussion: The Secretary agrees with the commenters that students 
should not have to receive a Federal Pell Grant during the same payment 
period to be eligible for an ACG or National SMART Grant. Rather, 
students who would otherwise be eligible for an ACG or National SMART 
Grant award but have already exhausted their Federal Pell Grant 
eligibility for the award year should be eligible to receive an ACG or 
National SMART Grant award as long as they received a Federal Pell 
Grant in the same award year.
    Change: Section 691.15(a)(2) has been revised to require that a 
student receive a Federal Pell Grant in the same award year, rather 
than the same payment period, to be eligible for an ACG or National 
SMART Grant. The Secretary has made conforming changes in Sec. Sec.  
691.65(a)(2) and 691.80(a) to reflect this change in the ACG and 
National SMART Grant student eligibility requirements. In addition, the 
Secretary has also made conforming changes to Subpart E of the Student 
Assistance General Provisions on verification of student aid 
application information by amending 34 CFR 668.51, 668.52, 668.54, 
668.55, 668.58, 668.59, 668.60, and 668.61. These changes are necessary 
to clarify that these sections apply to the ACG and National SMART 
Grant programs to ensure the synchronous administration of these 
programs.
Full-Time Enrollment
    Comments: One commenter expressed concern that the ACG and National 
SMART Grant regulations do not serve nontraditional students. The 
commenter believed that assistance from these programs should be 
available to students who enroll less than full-time.
    Discussion: Section 401A(c) of the HEA requires that a student must 
be enrolled full-time in order to be eligible to receive assistance 
under the ACG and National SMART Grant programs. The Secretary does not 
have the authority to change this requirement through regulations.
    Changes: None.
Rigorous Secondary School Program of Study Eligibility
    Comments: One commenter asked whether a student who has completed 
his or her secondary school coursework in December but who graduated 
after January 1, 2005, or 2006, is eligible for an ACG. Another 
commenter was concerned that students who are not of traditional 
college age would not be eligible for an ACG.
    Discussion: The requirement that a student have successfully 
completed a rigorous secondary school program of study after January 1, 
2006, for a first-year student and after January 1, 2005, for a second-
year student in order to receive an ACG is in section 401A(c)(3) of the 
HEA. The Secretary interprets the statute as requiring a student to 
have graduated in order to complete a rigorous secondary school program 
of study. For example, if a student completed the coursework of a 
rigorous secondary school program in December 2005, but actually 
graduated from the program after January 1, 2006, the student is 
eligible to receive a first year ACG. Although in the early years of 
the ACG program eligible students will be of traditional college age, 
as time goes by, students who are not of traditional college age may 
establish eligibility provided they have completed a rigorous secondary 
school program of study after the dates provided in the statute.
    Changes: None.
Grade Point Average
    Comments: Several commenters claimed that how and when to compute a 
cumulative GPA is confusing. One commenter wanted clarification on 
whether GPA for the student's eligible program meant cumulative GPA, 
major GPA, or something else. This commenter suggested removing the 
reference to eligible program if the Secretary intended a cumulative 
GPA computation. Some commenters supported the Secretary's 
interpretation of the GPA calculation for National SMART Grant 
eligibility in Sec.  691.15(c)(3). One commenter pointed out that, for 
National SMART Grants, the Secretary did not follow the language from 
section 401A(c)(3)(C)(ii) of the HEA, which provides that GPA is 
determined in the coursework required for the major, but instead 
required GPA to be determined for the coursework required for a 
student's eligible program. The commenter supported the burden 
reduction in this case, but objected to the regulatory approach. 
Another commenter believed that the GPA for ACGs should be defined the 
same way it is for National SMART Grants. Yet another commenter 
indicated that, for National SMART Grants, institutions should have the 
flexibility to review academic major and GPA no more frequently than is 
required by institutions to monitor students under their Satisfactory 
Academic Progress (SAP) policy, so as to align these two academically 
related monitoring policies.
    Discussion: As discussed in the preamble to the interim final 
regulations, the Secretary believes that a student's GPA for purposes 
of eligibility for the ACG and National SMART Grant programs should be 
calculated using the same standards that are used to calculate GPA for 
other academic and title IV purposes at the institution. The Secretary 
does not believe scores on tests in AP, IB, or College Level 
Examination (CLEP) programs should be converted to grades for any 
purpose under the ACG or National SMART Grant programs. For National 
SMART Grants in particular, the Secretary believes that the student 
must meet the GPA requirement based on all courses required for the 
student's eligible program, not just those required for the eligible 
major. The Secretary believes this approach is appropriate because it 
minimizes institutional burden when determining whether a student meets 
the GPA requirement and is in accord with other title IV, HEA program 
requirements related to GPAs. GPA cannot be computed the same way for 
the ACG Program as it is for the National SMART Grant Program because 
section 401A(c)(3) of the HEA requires a student to meet the necessary 
GPA only at the end of the student's first academic year for an ACG, 
but throughout the student's third and fourth academic years for a 
National SMART Grant.
    The Secretary believes that the monitoring requirements for SAP 
would not be adequate to determine eligibility for an ACG or National 
SMART Grant based on cumulative GPA. Under Sec.  668.32(f), although a 
student may be making satisfactory progress according to the 
institution's published SAP standards under Sec.  668.16(e), and if 
applicable, under Sec.  668.34, these standards allow a student to 
maintain a GPA below the 3.0 (on a 4.0 scale) GPA required to be 
eligible for an ACG or National SMART Grant. In addition, Sec.  
668.16(e)(4) provides that an institution must determine whether a 
student is making satisfactory progress at the end of each increment, 
which must not exceed the lesser of one academic year or one-half the 
published length of the program. In contrast, section 401A(c)(3)(C)(ii) 
of the HEA requires that a student meet the GPA requirement throughout 
the student's third and fourth academic year. Review of a student's GPA 
under the standards set forth in Sec.  668.16(e) would not ensure that 
a student is meeting the requirements of the National SMART Grant 
Program.
    Changes: None.

[[Page 64408]]

Transfer Student GPA
    Comments: We received several comments related to the GPA of 
transfer students. One commenter supported the Secretary's 
interpretation for transfer GPA calculations. Another commenter asked 
for clarification on how to treat GPA in the case of transfer students 
who are admitted for summer and then take a 3-credit summer course. 
Three commenters requested an option to use the GPA earned at prior 
colleges as the indicator of sufficient academic performance for 
payment for the first term at the new college to determine eligibility 
for an ACG or National SMART Grant because, at many colleges, it would 
require a significant reengineering of the business process to 
calculate a GPA based solely on courses accepted toward the program. 
The commenters believed that cumulative GPA from other institutions 
should sufficiently demonstrate academic achievement. Another commenter 
questioned the fairness of the transfer hours GPA policy. The commenter 
was concerned that students who do poorly at the first institution 
could transfer to gain ACG or National SMART Grant eligibility, because 
only the hours accepted by the new institution would be considered and 
all poor grades excluded. The student who does poorly and stays at the 
first institution would not be eligible, but the student who transfers 
could be.
    Discussion: The interim final regulations explain that, in the case 
of a transfer student, for the first payment period, institutions must 
rely on the grades of the courses from the prior institution accepted 
toward the student's eligible program. Transfer credits that were 
awarded through programs such as AP, IB, or CLEP programs should not be 
converted to grades to determine a student's GPA for purposes of 
eligibility for an ACG or National SMART Grant in the student's initial 
payment period after transferring. Once a student has the grades for a 
payment period at the new institution for coursework taken toward the 
eligible program, the institution may use the GPA calculated from those 
grades only, unless there is an institutional policy that a student's 
GPA at the new institution include transfer grades. While the Secretary 
agrees that cumulative GPA from a prior institution does serve as an 
academic performance indicator, the purpose of calculating GPA based 
solely on coursework accepted toward the eligible program is to ensure 
student eligibility for the ACG or National SMART Grant programs. 
Because this GPA calculation is used solely to determine a student's 
eligibility under these programs for the initial payment period of 
enrollment, there is no intrusion into institutional grading policy by 
the Secretary. Finally, the Secretary believes that the transfer hours 
GPA requirement in Sec.  691.15(d) of the interim final regulations is 
an equitable means of establishing a transfer student's eligibility. 
Students who perform poorly overall will likely still transfer in a GPA 
that is below 3.0. Thus, these students would not be significantly more 
likely to receive a grant than a student who did poorly but stayed at 
the same institution.
    Changes: None.
    Comments: One commenter asked the Secretary to clarify whether an 
institution is required to follow its standards for academic and title 
IV, HEA program purposes to determine a transfer student's GPA once it 
has established eligibility using grades in coursework that the 
institution accepts for the student's first payment period. For 
example, if an institution normally does not use grades on transferred 
credit for SAP or other purposes, does the institution have the option 
of using such grades for ACG and National SMART Grant recipients only?
    Discussion: An institution's policies for the administration of the 
title IV, HEA programs generally must be the same for all title IV, HEA 
programs. An institution may not establish a SAP policy that treats 
grades on transferred credits one way for ACG and National SMART Grant 
recipients, but another way for recipients of other title IV aid.
    Changes: None.
Prior Enrollment in a Postsecondary Educational Program
    Comments: Several commenters believed that students who attended 
postsecondary programs while completing high school should be 
considered first-year students for ACG eligibility purposes. Two 
commenters noted that some colleges offer the opportunity for a high 
school student to earn an associate's degree while completing high 
school. One commenter stated that it was possible for some of these 
students to enroll in college programs that only accept some of the 
credits the student has earned while in high school and, given the 
institution's definition of an academic year, the student may qualify 
as a first-year student. The commenter believed that, if the 
institution was treating the student as a first-year student, the 
student should be eligible for a first-year ACG.
    One commenter asked the Secretary to clarify whether a student who 
attended a postsecondary institution as part of a State-recognized 
dual-enrollment program is considered to have been enrolled as a 
regular student for purposes of determining prior enrollment. A few 
commenters asked for clarification of the Secretary's policy on prior 
enrollment. One commenter requested clarification as to whether a 
student who earned an associate's degree at the same time as he or she 
earned a high school diploma would be eligible for a second-year ACG, 
provided the transfer credits were less than what would be required to 
establish the student as a junior. The commenter also wanted to know if 
the same student would be eligible for a first-year ACG if he or she 
did not earn the associate's degree, and the transfer credits were less 
than what would be required to establish the student as a sophomore.
    Several commenters believed these final regulations should reflect 
guidance from the Department that prior enrollment in an undergraduate 
program after completion of high school would not affect a student's 
first year eligibility for an ACG and asked the Secretary to specify an 
effective date for this guidance.
    Discussion: The Secretary agrees that the regulations should be 
clarified to reflect that only enrollment as a regular student in an 
eligible program while in secondary school disqualifies a student from 
receiving a first-year ACG in the student's first academic year of 
postsecondary education. Under the Department's interpretation of 
section 401A(c)(3)(A), the term ``previously'' in the phrase 
``previously enrolled in a program of undergraduate education'' in 
section 401A(c)(3)(A)(ii) relates to completion of a rigorous secondary 
school program of study in section 401A(c)(3)(A)(i).
    A student is considered to have been previously enrolled in an 
eligible program if the student was admitted into that program as a 
regular student while still enrolled in a secondary school program of 
study. A regular student is a person who is enrolled or accepted for 
enrollment at a postsecondary educational institution for the purpose 
of obtaining a degree, certificate, or other recognized postsecondary 
educational credential offered by that institution. Therefore, a high 
school student who was enrolled in a dual-enrollment program with the 
purpose of obtaining an associate's degree is considered to have been 
enrolled as a regular student, whether the student actually earned the 
associate's degree or not. Thus, the student was previously enrolled in 
an eligible program of undergraduate education and is not eligible for 
a first-

[[Page 64409]]

year ACG. Such a student may be eligible for a second-year ACG if his 
or her transfer credits were less than what would be required to 
establish the student as enrolled for the student's third title IV, HEA 
academic year. However, if an otherwise eligible student took courses 
that were part of an associate's degree program, but was not enrolled 
for the purpose of obtaining the associate's degree (i.e., was not a 
regular student), the student would be eligible for a first-year ACG.
    Changes: Section 691.15(b)(1)(ii)(B) has been revised to clarify 
that a student is not eligible for a first-year ACG if the student was 
previously enrolled as a regular student in an eligible program while 
still enrolled in a secondary school program of study.
Documenting Completion of a Rigorous Secondary School Program of Study
    Comments: Many commenters expressed concern that the requirements 
for determining and documenting a student's completion of a rigorous 
secondary school program of study are too onerous. Several commenters 
asserted that it is unduly burdensome for institutions to determine by 
means of a postgraduation high school transcript whether a student has 
met the definition of a rigorous secondary school program of study 
under Sec.  691.16(d). Commenters noted that this requirement will be a 
substantial new undertaking for institutions and they will have to come 
up with the resources or processes to comply.
    Several commenters noted that many community colleges do not 
collect high school transcripts as part of their admissions process; 
instead, they use testing to determine readiness. Other commenters 
noted that the transcripts they are evaluating for ACGs reflect only 
six or seven semesters of high school coursework. These commenters were 
concerned that there would be a problem with the timing of admissions 
decisions and initial financial aid package offers, which occur in the 
winter or spring prior to enrollment in the fall, because there may be 
uncertainty about whether a student would complete a rigorous secondary 
school program of study. The commenters proposed several options to 
ameliorate the burden of documenting completion of a rigorous secondary 
school program of study. The commenters suggested adding an option for 
defining a rigorous secondary school program of study that could be 
applied at the midpoint of a student's final year in high school, 
noting that this option would provide greater assurance that the 
initial financial aid award package for the student would materialize 
for the student when the final high school transcripts are reviewed and 
also would provide some measure of administrative ease for colleges 
when evaluating the final secondary school transcripts. One commenter 
noted that, in the few cases when the student substantially deviates 
from the level of academic achievement on the partial transcript, 
institutions could withdraw the admissions offer. In addition, one 
commenter suggested adding an option to define a rigorous secondary 
school program of study as a total of 16 subject years of study within 
the five defined subject areas. The commenter noted that this 
definition would reflect a higher subject year count than the current 
minimum course requirements and a broader curriculum than the AP and IB 
option demonstrates by requiring certain scores in only two courses. 
The commenter believed that this alternative would be acceptable if 
coupled with confirmation of graduation and successful completion of 
senior year courses. Similarly, one commenter asked that an institution 
whose academic policy required the same coursework from all admitted 
students that the Secretary requires for rigorous secondary school 
programs of study under Sec.  691.16(d) be permitted to assume that an 
otherwise-eligible student had completed a rigorous secondary school 
program of study, without requiring the institution to retrieve and 
review every transcript.
    One commenter requested clarification as to whether there is a 
minimum score required for rigorous programs like AP and, if so, 
whether it is the minimum required by, for example, the institution or 
the State. Finally, one commenter asked for clarification as to whether 
it is necessary to have documentation such as for AP scores in the 
Financial Aid office or if maintaining documentation at the Admissions 
or Registrar's Office would be acceptable.
    Discussion: The Secretary believes the current regulations 
appropriately balance statutory requirements with institutional burdens 
raised by commenters. While the Secretary agrees that there is a 
concern with respect to the timing of the availability of complete high 
school transcripts and admissions and financial aid package offers for 
first-year ACGs, section 401A(c)(3)(A)(i) and (c)(3)(B)(i) of the HEA 
requires a student to complete, and graduate from, a rigorous secondary 
school program of study in order to be eligible for an ACG. The 
Secretary believes that a rigorous secondary school program of study 
continues through a student's fourth year of high school.
    Institutions do not always withdraw admissions offers when a 
student's final high school transcript differs significantly from the 
partial transcript. In the case of an ACG, the purpose of the 
transcript is to document the completion of a rigorous secondary school 
program of study. The Secretary does not regulate the admissions 
standards of postsecondary institutions. When a student substantially 
deviates from the level of academic achievement on the partial 
transcript, the Secretary cannot regulate to require institutions to 
withdraw their admissions offers. The Secretary's concern, for purposes 
of awarding an ACG, would be that the transcript documented the 
student's completion of a rigorous secondary school program of study.
    While institutions are responsible for maintaining documentation at 
the institution, no specific location is required. If an institution 
requires the same coursework that the Secretary requires for a rigorous 
secondary school program of study from an admitted student, and the 
financial aid office is certain that the transcript or equivalent 
document confirming completion of a rigorous secondary school program 
of study is kept at the admissions office or some other part of the 
institution, it could assume a student met the rigorous secondary 
school program of study criterion.
    Finally, it should be noted that the minimum scores for AP exams 
were published in Sec.  691.16(d)(5) of the interim final regulations.
    Changes: None.
Declaring an Eligible Major
    Comments: One commenter believed that the Federal Government should 
not insert itself into the process of determining when a student 
declares a major as this action usurps an institution's prerogative to 
establish its own academic requirements. Another commenter requested 
clarification on how to document intent to declare an eligible major 
and how to determine when a student is no longer displaying an intent 
to declare an eligible major. One commenter suggested that, when an 
institution's academic requirements do not allow a student to declare 
an eligible major in time to qualify for a National SMART Grant, the 
student should be allowed to meet the declaration of eligible major 
requirement by enrolling in the courses deemed by the institution to be 
consistent with fulfilling the requirements of an intended eligible 
major and declaring an intention to

[[Page 64410]]

complete a major in an eligible field of study.
    Discussion: The Secretary does not agree that the regulations 
intrude on an institution's prerogative to establish its own academic 
requirements. In addition, the Secretary believes that documentation of 
intent to declare an eligible major should be determined by 
institutional policy. The regulations permit a student to fulfill the 
requirement that he or she declare an eligible major by enrolling in 
the courses deemed by the institution to be consistent with fulfilling 
the requirements of an intended eligible major and declaring an 
intention to complete a major in an eligible field of study if that is 
the institutional policy.
    Changes: None.

Section 691.16 Recognition of a Rigorous Secondary School Program of 
Study

    Comments: A few commenters supported the multiple options for 
demonstrating completion of a rigorous secondary school program of 
study, while other commenters believed that additional secondary school 
programs of study should be recognized as rigorous. One commenter 
believed that the recognized State secondary school programs of study 
should be the single standard for a rigorous secondary school program 
of study, as it would greatly reduce the administrative burden for 
institutions. A few commenters believed that the minimum course 
requirements in Sec.  691.16(d)(2) are too strict and would unfairly 
eliminate from eligibility students who should be eligible for an ACG. 
Two commenters believed that some students who meet their admissions 
requirements but who do not or cannot take the required courses in high 
school should not be eliminated from eligibility. For example, one 
commenter noted that advanced students who reduce their high school 
classes, such as English, during their last year of high school to take 
college classes may not qualify, even though their secondary school 
programs of study were quite rigorous. Another commenter gave the 
example of a student who otherwise qualified as a student who had 
completed a rigorous secondary school program of study, but who 
attended a high school that did not offer physics.
    One commenter believed that the Secretary should ensure that all 
approved State programs use wording consistent with the minimum course 
requirements under Sec.  691.16(d)(2) to the extent possible so that 
institutions will know that differences are not just semantic. For 
example, the commenter questioned whether a particular State standard 
requiring three years of math (at the algebra I level or higher) is 
intended to be different from the Federal standard requiring three 
years of math (including algebra I and a higher level course such as 
algebra II, geometry, or data analysis and statistics). A few 
commenters were concerned with the lack of uniformity in secondary 
school course descriptions, noting that States often combine courses 
into one general course; such as combining algebra I and geometry into 
a math I course offered over two academic years. The commenters 
believed that it is unreasonable to expect an institution to be 
familiar with the graduation requirements for all school districts in 
order to determine whether a student's courses meet the definition of a 
rigorous secondary school program of study.
    One commenter believed that the rigorous secondary school programs 
of study established by States and recognized by the Secretary should 
not be revised annually as significant changes would create confusion 
for students and undue burden for institutions.
    Discussion: Section 401A(f) of the HEA requires the Secretary to 
recognize at least one rigorous secondary school program of study in 
each State. As there is no statutory requirement for States to submit 
programs for recognition, the Secretary believed it was necessary to 
develop additional options for completion of a rigorous secondary 
school program of study that would ensure that students in each State 
have the opportunity to qualify for an ACG. The Secretary believes that 
the breadth of the options provides the vast majority of students for 
whom this grant program was intended with sufficient means to 
demonstrate eligibility for an ACG. To the extent that these options do 
not provide sufficient means to demonstrate eligibility, the Secretary 
encourages individuals, high schools, and postsecondary institutions to 
work together with States so that States may submit additional or 
revised programs for recognition. As for an advanced student who 
reduces his or her high school classes to take college classes, the 
Secretary reminds commenters that completion of college courses that 
meet the minimum course requirements for a rigorous secondary school 
program of study count toward completion of a rigorous secondary school 
program of study if they are accepted toward the student's high school 
diploma.
    The Secretary understands the commenters' concerns with 
inconsistent wording in State programs and a lack of clarity of course 
descriptions. However, the Secretary does not believe that it is 
appropriate to establish a national standard for the wording of State 
submissions of rigorous secondary school programs of study or course 
descriptions and recommends that concerns with consistency of wording 
be taken up with States and secondary schools.
    The Secretary believes it is imperative that there be an annual 
opportunity for States to submit changes to their rigorous programs of 
study because, to the extent that these changes result in a more 
rigorous program of study, students from that State graduating in that 
year would be held to the new standard when applying for an ACG. If, 
however, these changes result in a less rigorous program of study, the 
Secretary may deny recognition if the Secretary determines the level of 
rigor has fallen below the HEA's intended level.
    Changes: None.
    Comments: A few commenters questioned whether coursework taken 
prior to high school counts toward the minimum course requirements 
under Sec.  691.16(d)(2). Specifically, one commenter asked whether a 
student who is otherwise eligible under Sec.  691.16(d)(2), and who 
took a foreign language in 8th grade but did not take one later is 
eligible for an ACG.
    Another commenter noted that many students take algebra I prior to 
high school; therefore, it does not appear on the student's high school 
transcript. The commenter asked the Secretary to clarify under what 
circumstances such a student can be considered to have completed 
algebra I for the minimum mathematics course requirements under Sec.  
691.16(d)(2). In particular, the commenter wanted to know if an 
institution may assume that a student has completed algebra I if it is 
not included on the transcript, but geometry, algebra II, or calculus 
are included.
    Discussion: If a student completed the secondary school curriculum 
in a school system in which the high school does not include other 
secondary school grades, e.g., the high school does not include grade 
eight or nine, institutions should use their normal processes for 
determining whether coursework completed in earlier grades is included. 
However, an institution may make certain assumptions, as appropriate, 
based on its knowledge of a school system's curriculum. For example, if 
a high school transcript covering only grades 10-12 shows completion of 
three years of English, the institution may assume that the student 
completed a year of English in the ninth grade.

[[Page 64411]]

    Changes: None.
    Comments: One commenter recommended that the minimum science course 
requirements in Sec.  691.16(d)(2) be changed to recognize other 
challenging science coursework. The commenter believed that a student 
who completed physical science in ninth grade, biology in tenth grade, 
environmental science in eleventh grade and anatomy and physiology in 
twelfth grade should be considered to have met the minimum science 
course requirement.
    Discussion: The Secretary believes that the minimum coursework 
requirements in the regulation are appropriate. These standards 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 http://www.ed.gov/pubs/NatAtRisk/index.html. As previously noted, to the extent that these 
options do not provide sufficient means to demonstrate eligibility, the 
Secretary encourages individuals, high schools, and postsecondary 
institutions to work together with States so that States may submit 
additional or revised programs for recognition.
    Changes: None.
    Comments: One commenter recommended that an exception be made to 
the foreign language course requirement under Sec.  691.16(d)(2) for 
students with physical limitations such as hearing loss. The commenter 
noted that, because of language deficits that accompany hearing loss, 
most deaf students do not take languages other than English as a part 
of their secondary programs, and few schools for the deaf require or 
encourage foreign language as a part of their curriculum. The commenter 
added that even if American Sign Language (ASL) meets the definition of 
a foreign language, most deaf students are already ASL users and do not 
need to study it in secondary school.
    Discussion: While the Secretary understands the concerns raised by 
the commenters, she believes that a change to this requirement is 
unnecessary. The Secretary considers one year of ASL to meet the 
requirement of one year of a language other than English necessary to 
meet the minimum course requirements under Sec.  691.16(d)(2). Also, as 
stated previously, the Secretary believed it was necessary to develop 
additional options for completion of a rigorous secondary school 
program of study that would ensure that students in States that did not 
submit programs for recognition have the opportunity to qualify for an 
ACG. The Secretary believes that the breadth of the options, including 
participation in honors programs established by States or completion of 
AB or IB courses and the earning of a minimum score on the exams for 
those courses, provides the vast majority of students for whom this 
grant program was intended with sufficient means to demonstrate 
eligibility for the ACG.
    Changes: None.
    Comments: One commenter questioned whether students attending an 
institution with a ``bridging year'' program and completing their 
senior year of high school at the postsecondary institution would be 
eligible for a second year ACG if they do not receive a high school 
diploma, but instead earn a General Education Development (GED) 
certificate. One commenter believed that the Department was 
interpreting the regulations to mean that a student who obtains a GED 
is automatically ineligible for an ACG or National SMART Grant simply 
because he or she has obtained a GED. The commenter noted that some 
home-schooled students, who otherwise qualify as having completed a 
rigorous secondary school program of study, are advised to take the GED 
to meet college admission requirements. The commenter asked the 
Department to make clear that such students who obtain the GED are not 
automatically ineligible.
    Discussion: A student who obtained a GED is not automatically 
ineligible for an ACG or National SMART Grant. However, a student who 
obtains a GED in lieu of a high school diploma cannot use the GED, 
alone, to demonstrate completion of a rigorous secondary school program 
of study. The Department believes that completion of a GED program 
alone does not demonstrate the academic achievement of a rigorous 
secondary school program of study. Such a student can nonetheless 
qualify for an ACG with a GED by completing one of the rigorous 
secondary school programs of study recognized under Sec.  691.16.
    Changes: None.
    Comments: Two commenters asked the Department to clarify which 
level of IB examination, standard or higher, a student must take to 
qualify for an ACG. One commenter believed that the regulations confuse 
the IB Diploma program with a stand-alone IB course. The commenter 
believed that the regulations should be changed to make clear that a 
student is considered to have completed a rigorous secondary school 
program of study if he or she completes and achieves the required 
minimum score for the exam on at least two IB courses, whether or not 
they are part of an IB Diploma Program.
    Discussion: A score of ``4'' or higher on either the standard level 
or higher level IB examination for at least two IB courses meets the 
exam portion of the IB standard for completion of a rigorous secondary 
school program of study. The Secretary agrees that a student who 
completes and achieves the required minimum score for the exam on at 
least two IB courses, whether or not they are part of an IB Diploma 
Program, should be considered to have completed a rigorous secondary 
school program of study.
    Changes: Section 691.16(d)(4) has been changed to clarify that a 
student who completes and achieves the required minimum score for the 
exam on at least two IB courses, whether or not they are part of an IB 
Diploma Program, is considered to have completed a rigorous secondary 
school program of study.
    Comments: One commenter believed that high scores on standardized 
achievement tests, such as the SAT and ACT, should be recognized as a 
rigorous secondary school program of study. The commenters believed 
that this recognition would be consistent with the inclusion of 
completion of IB or AP courses with high test scores as rigorous 
programs because they establish 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. The commenter believed that this proposal would reduce burden on 
institutions, as these test scores are readily accessible. The 
commenter believed that States and test owners could work together to 
determine the qualifying test score.
    Discussion: The Secretary does not agree that high scores on 
standardized achievement tests should be recognized as a rigorous 
secondary school program of study. Unlike the IB and AP tests, there 
are no specific courses or curriculum that correspond to the standard 
achievement tests. The Secretary believes that both components are 
necessary to demonstrate that a student has successfully completed a 
rigorous secondary school program of study.
    Changes: None.

Section 691.17 Determination of Eligible Majors

    Comments: Several commenters whose institutions do not offer 
programs in the eligible majors were concerned that their institutions 
were excluded from the National SMART Grant Program. In one case, the 
institution

[[Page 64412]]

offered majors with concentrations in the eligible fields. The 
commenter requested clarification on whether students in these types of 
programs would be eligible. In another case, the institution offered 
intensive instruction in math and science as part of a liberal arts 
degree. Two commenters from this institution requested that this 
institution be included among eligible institutions and one of these 
commenters also requested an alternative means for students whose 
institution does not offer eligible majors to qualify.
    Discussion: Section 401A(c)(3)(C) of the HEA requires a student to 
pursue a major in the physical, life, or computer sciences, 
mathematics, technology, or engineering (as determined by the Secretary 
pursuant to regulations); or a critical foreign language in order to be 
eligible for a National SMART Grant. No alternative categories of 
majors are indicated in the HEA, and the Secretary does not have the 
authority to provide alternative categories through regulations in 
those cases where ineligible majors include concentrations in eligible 
fields or where liberal arts degrees do not provide eligible majors but 
do include some intensive instruction in eligible fields.
    Changes: None.
    Comments: Several commenters addressed the determination of 
eligible majors. One commenter expressed concern that a number of 
scientific fields were omitted and that the eligible languages were too 
narrowly identified for purposes of available undergraduate majors. 
Another commenter was concerned that Evolutionary Biology was omitted 
from the eligible majors list. One commenter was concerned that 
teaching degrees in the science and math fields were not included in 
the list of eligible majors. Another commenter suggested taking a more 
thorough look at the majors, especially in areas of national need, such 
as nursing and public health. Yet another commenter was concerned about 
the consultation process and thought that the Department should consult 
directly with organizations such as the National Academy of Sciences 
and other professional scientific organization to receive input on the 
determination of eligible majors.
    One commenter recommended that, if the Department was unable to 
supply the list of eligible majors by February 1 preceding the academic 
year for which determinations of eligibility must be made, the 
Department should permit an institution to use the current list for 
first-time determinations of National SMART Grant eligibility. One 
commenter requested clarification on whether a student would still be 
eligible for a National SMART Grant if that student's major is removed 
from the list of approved majors at any time subsequent to the 
student's first National SMART Grant payment, when the student's 
payment was based on the student's intent to declare an eligible major 
as described in Sec.  691.15(c)(2)(i)(B). Finally, one commenter 
requested clarification on an institution's responsibility to ensure 
that qualifying majors are being actively pursued.
    Discussion: Section 401A(c)(3)(C) of the HEA specifies that a 
student must pursue a major in the physical, life, or computer 
sciences, mathematics, technology, or engineering (as determined by the 
Secretary pursuant to regulations); or a critical foreign language in 
order to be eligible for a National SMART Grant. Evolutionary Biology 
was omitted from the original list of eligible majors in error; a 
revised list including this major and Exercise Physiology, which was 
also omitted in error, has been posted.
    The list of eligible majors will be reviewed annually; however, 
section 401A(c)(3)(C)(i)(II) of the HEA only requires consultation on 
the list of critical foreign languages with the Director of National 
Intelligence. The current list of critical foreign languages was 
developed in consultation with the Director of National Intelligence as 
required.
    The Secretary will continue to identify a list of eligible majors, 
including critical foreign languages, annually for an award year to 
ensure that the most current information is used and will publish the 
list in time for institutions to plan awards accordingly. Because a 
student's intent to declare an eligible major as described in Sec.  
691.15(c)(2)(i)(B) serves as a proxy for actually declaring an eligible 
major until the declaration is permitted by an institution, under Sec.  
691.17(c) a student would still be eligible if a student's major is 
removed from the list of approved majors at any time subsequent to the 
student's first National SMART Grant payment, when the student's 
payment was based on the student's intent to declare an eligible major 
as described in Sec.  691.15(c)(2)(i)(B) as well as when the student's 
payment was based on a declared eligible major under Sec.  
691.15(c)(2)(i)(A). Finally, it is the institution's responsibility to 
ensure that qualifying majors are being actively pursued. The 
institution is responsible for ensuring this active pursuit of eligible 
majors and may use any institutional process that it chooses to 
document this intent.
    Changes: None.

Section 691.61 Submission Process and Deadline for a Student Aid Report 
or Institutional Student Information Record

    Comments: One commenter noted that Sec.  691.61(b) cross-referenced 
Sec. Sec.  668.60 and 668.164 and that conforming changes were made to 
Sec.  668.164, but that Sec.  668.60 was not amended to include the ACG 
and National SMART Grant programs. Therefore, the commenter stated that 
it is unclear which provisions of Sec.  668.60 apply to the ACG and 
National SMART Grant programs.
    Discussion: The Secretary agrees that the requirements in Sec.  
668.60 that apply to the ACG and National SMART Grant programs need 
clarification.
    Changes: Section 668.60 is revised to clarify how it applies to the 
ACG and National SMART Grant programs.
    Comments: One commenter stated that Sec.  691.61(a) appears to 
place the responsibility on institutions to review the record of all 
FAFSA filers to identify eligible students rather than just those FAFSA 
filers identified by the Secretary as potentially eligible students. 
The commenter suggested that the institution should be allowed to rely 
on information on the Student Aid Report (SAR) or ISIR as to whether 
the student is potentially eligible to receive an ACG or National SMART 
Grant. That is, if the student's SAR or ISIR does not indicate that the 
student is potentially eligible to receive an ACG or National SMART 
Grant, the institution would not be required to check its own records 
or take any other action to determine whether the student is 
potentially eligible. Rather, the institution could assume that the 
student is not eligible for the ACG or National SMART Grant and take no 
further action.
    Discussion: To implement the ACG Program, the Secretary has 
instituted procedures for students to self-identify that they have 
completed a rigorous secondary school program of study and 
institutions, at their option, may generally rely on this self-
identification process. Most potentially eligible students will have 
had an opportunity to self-identify through the FAFSA (application) 
process on this matter and will have a positive indication on their SAR 
or ISIR with regard to completion of a rigorous secondary school 
program of study. Under Sec.  691.61, an institution is allowed to rely 
on the information on a student's SAR or ISIR as to whether the student 
is potentially eligible for an ACG, unless the institution has

[[Page 64413]]

information from another source indicating that the student is 
potentially eligible. For example, if a student whose SAR or ISIR does 
not indicate potential eligibility for the ACG (because the student has 
not yet self-certified as to his or her completion of a rigorous 
secondary school program of study) informs the institution that he or 
she has completed such a secondary school program of study, and is thus 
potentially eligible for the ACG, then the institution must follow up 
on that information and determine whether the student is eligible for 
the ACG.
    Outside of the eligibility requirements common to both the ACG and 
the National SMART Grant programs found in Sec.  691.15(a), i.e., the 
general eligibility requirements from 34 CFR part 668, subpart C; U.S. 
citizenship; receiving a Federal Pell Grant; and being enrolled full-
time, the primary eligibility requirements for receipt of a National 
SMART Grant relate to pursuit of an eligible major and having the 
requisite GPA. Information about these eligibility factors will not be 
found on the SAR or ISIR. Thus, for the National SMART Grant Program, 
there is not the same issue of determining eligibility for students who 
do not have eligibility information on their SAR or ISIR as there is 
for the ACG Program. However, it should be noted that an institution 
does have to determine whether its students meet the eligibility 
requirements for the National SMART Grant Program, including which of 
its students are in eligible majors, and award those students, if 
otherwise eligible, a National SMART Grant.
    Changes: None.

Section 691.62 Calculation of a Grant

Ratable Reduction
    Comments: Two commenters expressed concern over the potential for 
ratable reductions to the awards. One of the commenters inquired as to 
when award maximums would be considered final for the year. The other 
commenter offered multiple suggestions for avoiding ratable reductions.
    Discussion: Section 401A(d)(1)(B)(ii) of the HEA requires the 
Secretary to ratably reduce the maximum grant amounts for both programs 
when the funds available for a given award year are less than the 
amount needed to fund full awards for all eligible students. 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. Scheduled Awards for the ACG and National 
SMART Grant programs will be announced annually in conjunction with the 
announcement of Scheduled Award amounts for the Federal Pell Grant 
Program. Historically, these announcements have occurred between 
December and February prior to the beginning of the award year.
    The Secretary uses multiple data sources to best predict the number 
of eligible recipients for the ACG and National SMART Grant programs 
and will monitor disbursements from both programs based on current year 
reports received from postsecondary institutions. Every effort will be 
made to avoid ratable reductions. However, if ratable reductions are 
necessary, the Secretary will notify the community promptly of the new 
Scheduled Awards and the procedures for ratably reducing the ACG and 
National SMART Grant awards.
    Changes: None.
Packaging
    Comments: Several commenters objected to the requirement that the 
amount of an ACG or National SMART Grant for an academic year, in 
combination with the student's EFC and any other student financial 
assistance available to the student, cannot exceed the student's cost 
of attendance for that academic year. One commenter suggested that 
grants from both programs be awarded, similar to Federal Pell Grants, 
without regard to either the student's financial need or the amount of 
other student financial assistance received. Another commenter proposed 
that the grants be allowed to replace EFC, but not to exceed the 
student's cost of attendance when combined with other student financial 
assistance received.
    An additional set of commenters requested that a $300 overaward 
threshold be added to the ACG and National SMART Grant programs, 
similar to the threshold allowed under Sec.  673.5(d) for the campus-
based programs. One of these commenters also believed that there is 
confusion over which definition of estimated financial assistance 
applies to the ACG and National SMART Grant programs. Yet another 
commenter requested that Chapter 31 veterans' education benefits be 
excluded from all definitions of estimated financial assistance.
    Discussion: The Secretary believes that the packaging requirement 
is appropriate. As noted in the preamble to the interim final 
regulations, ACGs and National SMART Grants are need-based grants in 
that the HEA requires recipients to be eligible for Federal Pell 
Grants. Section 471 of the HEA defines the amount of need of any 
student as cost of attendance minus EFC minus estimated financial 
assistance. Need-based grant assistance cannot replace a family's 
expected contribution toward a student's postsecondary expenses.
    The overaward threshold allowed under the campus-based programs 
exists to assist institutions with the variations of earnings under the 
Federal Work-Study program and the estimates institutions must make in 
projecting utilization of Federal Perkins Loan and Federal Supplemental 
Educational Opportunity Grant funds as well as the bearing of 
collections on the availability of funds under the Federal Perkins Loan 
Program. Because these issues do not exist for the ACG and National 
SMART Grant programs, an overaward threshold is not necessary.
    Regarding the confusion over which definition of estimated 
financial assistance applies to the ACG and National SMART Grant 
programs, the Secretary agrees that the differences among the three 
definitions can cause confusion. Because the definitions in Sec. Sec.  
682.200(b) and 685.102(b) have exclusions based on statutory language 
that does not apply to the ACG and National SMART Grant programs, we 
intend to modify the language in Sec.  691.62(c) to reference the 
definition of estimated financial assistance in Sec.  673.5(c).
    Chapter 31 veterans' education benefits may not be excluded from 
the definition of estimated financial assistance because there is no 
statutory basis for exclusion of Chapter 31 benefits. Section 
428(a)(2)(C)(ii) authorizes only Chapter 30 veterans' education 
benefits and AmeriCorps benefits and awards to be excluded when 
determining subsidized loan eligibility. Further, when determining a 
student's eligibility for an ACG or National SMART Grant, an 
institution may exclude from estimated financial assistance any portion 
of a subsidized Federal Stafford Loan that is equal to or less than the 
amount of the student's Chapter 30 veterans' education benefits and 
AmeriCorps education awards or post-service benefits.
    Changes: Section 691.62(c) has been revised to provide that other 
student financial assistance is estimated financial assistance as 
defined in Sec.  673.5(c).

Section 691.63 Calculation of a Grant for a Payment Period

    Comments: One commenter suggested that the Department review the 
Federal Pell Grant formulas (and thus, these formulas in Sec.  691.63) 
to simplify the payment period calculations. The commenter also asked 
the Secretary to

[[Page 64414]]

consider revising the academic year definition for clock hour programs 
from 30 weeks to 26 weeks due to the change made by the HERA.
    Discussion: Given the time constraints associated with the 
development of regulations resulting from the enactment of the HERA 
(especially with respect to the implementation of the ACG and the 
National SMART Grant programs), the Secretary does not believe that it 
would be prudent to attempt to change formulas used in the calculation 
of grants for the Federal Pell Grant, the ACG, and the National SMART 
Grant programs at this time. While such a review and possible revision 
of those formulas may prove to be beneficial at a later time, the 
Secretary believes that, since the formulas have been used for a long 
time and are familiar to the financial aid community, it would be 
unwise to revise them now when the aid community already has to deal 
with the changes resulting from the HERA.
    To reflect the change made by the HERA, a change to the definition 
of an academic year for programs offered in clock hours was made in 
previously published regulations. Section 668.3 now contains a 
definition of an academic year that provides that 26 weeks of 
instructional time is the minimum number of weeks of instructional time 
in an academic year for a clock hour program, while retaining 30 weeks 
of instructional time as the minimum number of weeks of instructional 
time for a credit hour program. That definition also retains the 
provision that, under certain conditions, the Secretary may approve an 
academic year with a minimum of 26 weeks of instructional time for a 
credit-hour program.
    Changes: None.
    Comments: One commenter believed that the determination of 
enrollment status is an eligibility criterion and not a factor in the 
calculation of the grant payment and that for payments for payment 
periods calculated under Sec.  691.63(d), commonly referred to as 
Formula 3, it would seem much simpler just to direct the institution to 
use the same enrollment status determined for a Federal Pell Grant to 
determine eligibility for an ACG or National SMART Grant award. The 
commenter suggested that a cross-reference to the Federal Pell Grant 
Program regulations could be used to determine a student's enrollment 
status for an ACG or National SMART Grant.
    Discussion: The Secretary believes that the public will benefit 
from a complete set of regulations to implement the ACG and National 
SMART Grant programs, rather than providing cross-references to the 
Federal Pell Grant Program regulations throughout the ACG and National 
SMART Grant regulations.
    Changes: None.

Section 691.75 Determination of Eligibility for Payment

    Comments: With respect to the institution's determination about 
whether a student is pursuing an eligible major at the beginning of a 
payment period, one commenter suggested changing ``is no longer 
pursuing a required major'' in Sec.  691.75(b)(3) to ``is not pursuing 
a required major'' to cover not only those situations in which the 
student had at one time (before the beginning of the payment period) 
been pursuing an eligible major, but stopped doing so, but also 
situations in which the student had never pursued, and is still not 
pursuing, an eligible major.
    Discussion: The Secretary agrees with the commenter's suggestion. 
With this change, all situations in which the institution determines 
that the student is not pursuing a required major at the beginning of 
the payment period will be covered. Then, as the regulations go on to 
address, if the institution reverses a determination before the end of 
the payment period, the institution may pay the student a National 
SMART Grant for the entire payment period.
    Changes: Section 691.75(b)(3) and (c) has been revised to change 
``is no longer pursuing a required major'' to ``is not pursuing a 
required major.''
    Comments: One commenter asked how the financial aid office should 
deal with eligibility for a student for a National SMART Grant if the 
student was one hour short of being a junior at the beginning of one 
term, but reached junior status by the next term. The commenter asked 
if the aid office should start paying such a National SMART Grant in 
the middle of the academic year. The commenter also asked whether the 
aid office should pay a student for the spring and summer terms only, 
if the student does not have at least a 3.0 GPA before fall starts but 
does before spring. The commenter also asked about the National SMART 
Grant eligibility of a student who changed to an ineligible major. The 
commenter asked whether the aid office would stop paying the student at 
the point at which the student changed to an ineligible major or would 
retroactively take the National SMART Grant away from the student 
entirely.
    Another commenter asked what should be done if a student has a 3.0 
GPA when the fall term starts but drops below that average after (the 
previous term's) grades are posted. The commenter also wanted to know 
what would happen if the student's GPA was back up to at least 3.0 by 
the spring term. Another commenter asked how grades of incomplete are 
to be considered with respect to the GPA requirement. Another commenter 
asked for clarification of how an institution should determine GPA and 
academic year level when the institution first becomes aware of a 
student's prior postsecondary attendance after the student's transfer 
credits for fall attendance (for which no aid was received) are 
received late in the spring semester.
    Finally, several commenters raised an issue related to eligible 
students who, in fact, did meet during the payment period in question 
with the eligibility requirements for an ACG or a National SMART Grant 
associated with the GPA or with the declaration of an eligible major, 
but for whom the institution erred when it determined that the students 
failed to meet those requirements and did not discover its mistake 
until after the end of that payment period. The commenters suggested 
that these students should receive a grant for the completed payment 
period.
    Discussion: Section 691.75 addresses the factors that an 
institution must consider to determine that a student is eligible each 
time it makes a payment to a student of an ACG and a National SMART 
Grant. Section 691.75(a)(1) provides that the institution has to 
determine that the student meets the eligibility criteria listed in 
Sec.  691.15. For a National SMART Grant, one of those eligibility 
criteria is that the student be in the third or fourth academic year of 
an eligible program. (Note that the third academic year of the 
student's program is not necessarily synonymous with the junior year of 
the student's program.) Nevertheless, if the student is one hour short 
of starting his or her third academic year at the beginning of a term 
(e.g., the fall term), but begins the third academic year by the next 
term (the spring term) (presumably at the beginning of that term), then 
the student, if otherwise eligible, qualifies for a National SMART 
Grant for that spring term. The student would not qualify for a 
National SMART Grant payment for the fall term in this example but may 
qualify for any remaining second-academic-year ACG eligibility for this 
fall term. The institution would start paying the National SMART Grant 
in the middle of the institution's year, i.e., at the beginning of the 
spring term. This issue is further clarified in Sec.  691.63(h), which

[[Page 64415]]

provides that, in the case of a payment period with two academic years, 
an institution must calculate the payment for the payment period using 
the ACG or National SMART Grant Scheduled Award of the academic year 
being completed.
    With regard to a student who does not have at least a 3.0 GPA (for 
the first academic year for a second-year ACG, and for the most 
recently completed payment period in the student's eligible program for 
a National SMART Grant) before fall starts, but does before spring, 
Sec.  691.75(b)(2) and (3) indicates that the student, if otherwise 
eligible, can receive an ACG or National SMART Grant for the entire 
fall term if the institution determines that the student has the 
required minimum 3.0 GPA before the end of the fall term. On the other 
hand, if the institution does not make the determination that the 
student has at least a 3.0 GPA until after the end of the fall term, 
then, under Sec.  691.75(c), the student cannot receive an ACG or 
National SMART Grant for the fall term.
    With respect to an eligible student who is receiving a National 
SMART Grant, but then changes to an ineligible major (and does not 
change back to an eligible major), the institution may not make any 
additional National SMART Grant payments (for the payment period in 
which the change of majors took place or for future payment periods) to 
the student once the student has changed to the ineligible major, 
regardless of whether that change is made at the end of a payment 
period or during the payment period. However, any payments that were 
made to an eligible student before he or she changed to an ineligible 
major are legitimate payments and do not have to be repaid.
    When a student has a 3.0 GPA when the fall term begins, but that 
GPA at that time does not include grades from the previous term, the 
institution may not have all of the information it needs to determine 
whether the student is eligible for an ACG or National SMART Grant. For 
the ACG for the second academic year of the student's eligible program, 
the HEA requires that the student have at least a 3.0 GPA for the first 
academic year of his or her eligible program. For the National SMART 
Grant, the requirement is that the student have at least a 3.0 GPA for 
his or her courses in the eligible program up through the most recently 
completed payment period (term in this example). For either program, if 
there are courses that have been taken in the previous term that are 
part of the coursework for which the student must have at least a 3.0 
GPA and grades for those courses are not yet available, Sec.  691.75(d) 
provides that the institution may make one interim disbursement for a 
payment period. However, when those grades become available, they must 
be factored into the GPA. At that time, if the student does not have 
the required GPA, the payment made by the institution before the 
student's GPA could be calculated becomes an overpayment that must be 
repaid by the institution. These provisions would apply, as well, to 
any applicable coursework for which the student initially received a 
grade of incomplete.
    If information about a student's transfer of credit from another 
institution comes to the institution's attention late in, or after, a 
term, the institution may have already made a determination of 
eligibility that did not consider that information. If that information 
affects a student's GPA or academic year level and thus could affect 
the student's eligibility for an ACG or National SMART Grant, the 
institution must factor it into its determination of the student's 
eligibility and take appropriate action.
    Regarding erroneous determinations by an institution that, for a 
particular payment period, an otherwise eligible student did not have 
the required GPA or had not declared an eligible major, if such a 
student in fact had satisfied those requirements during that payment 
period, that student would be eligible for a payment of the applicable 
grant regardless of whether the institution discovered its mistake 
before or after the completion of that payment period.

Section 691.78 Method of Disbursement--By Check or Credit to a 
Student's Account

    Comments: Several commenters noted that Sec.  691.78(b), which 
addresses the return of funds paid to a student who leaves the 
institution before the first day of classes, seems duplicative of Sec.  
668.21. In addition, the commenters also found references to award year 
in Sec.  691.78(c) confusing, as ACG and National SMART Grant awards 
are determined on an academic year basis.
    Discussion: The Secretary agrees that Sec.  691.78(b) is redundant. 
The use of the term ``award year'' in Sec.  691.78(c) is appropriate 
even though a particular student's eligibility is determined based on 
the student's completion of an academic year not an award year. Funds 
for the ACG and National SMART Grant are appropriated for an award 
year, which is separate and distinct from the eligibility 
determination. The language in Sec.  691.78(c) addresses what actions 
must occur when delivering funds to a student during an award year.
    Changes: The Secretary has removed Sec.  691.78(b) and made a 
conforming change by removing the provision from Sec.  690.78 of the 
Federal Pell Grant Program regulations.

Section 691.80 Redeterminations of Eligibility for a Grant Award

    Comments: One commenter asked the Secretary to clarify how ACG and 
National SMART Grant funds should be handled if a student receives the 
funds prior to dropping to a less than full-time enrollment status. 
Specifically, the commenter wanted to know whether the institution must 
remove the funds from the student's account, or prorate the funds as an 
institution would be required to do with Federal Pell Grant funds.
    Discussion: According to Sec.  691.80(b), when there is a change in 
the student's enrollment status, the institution's policy for 
recalculating awards takes effect. For example, an institution's policy 
may establish a recalculation date at the end of its drop-add period 
(also known as a census date) by which the student's enrollment status 
for the term will be finalized. The enrollment status is, thus, defined 
as the number of credit hours the student is enrolled in at the census 
date. Under such a policy, if a student was enrolled full-time at the 
beginning of the term but, by the census date, the student had dropped 
to half-time enrollment status, the institution must use the half-time 
enrollment status to determine eligibility for the ACG or National 
SMART Grant. Because the HEA requires full-time enrollment, the student 
in this example would not be eligible for the ACG or National SMART 
Grant for that term, and any ACG or National SMART Grant funds 
disbursed for that term would have to be repaid by the student. On the 
other hand, if the student dropped below full-time enrollment after the 
recalculation date, his or her ACG or National SMART Grant award would 
be based upon full-time enrollment.
    Situations in which information is received after a determination 
of eligibility has been made are governed by Sec.  668.16(f), which 
states that an institution must identify and resolve discrepancies that 
arise from the institution's receipt of any information that has 
bearing on a student's eligibility for funds under the title IV, HEA 
programs. If that information affects the amounts and or types of title 
IV aid the student is receiving or may be eligible to receive, the 
institution must take appropriate actions.
    Changes: None.

[[Page 64416]]

Section 691.83 Submission of Reports

    Comments: Several commenters asked the Secretary to clarify whether 
the Secretary intends to include the academic year level of a grant in 
the payment data submitted by institutions. The commenters noted that, 
without this information in the National Student Loan Data System 
(NSLDS), an institution would not know whether a transfer student had 
already received grant funds at a given award level, as the grant level 
will not always be apparent from the award (for example, if the grant 
amount has been reduced to avoid an overaward).
    Discussion: In addition to data similar to what is submitted to the 
Secretary through the Common Origination and Disbursement (COD) system, 
institutions will also provide the academic year for the award for both 
the ACG and National SMART Grant programs. This information will be 
available to institution through the NSLDS, which will reflect the 
academic year completed by the student.
    Institutions will also provide information on the rigorous 
secondary school program of study that was used to confirm eligibility 
for an ACG and the student's academic major (using CIP codes) for a 
National SMART Grant. Specifications for this COD reporting has been 
posted to the Department's Information for Financial Aid Professionals 
Web site.
    Changes: None.

Executive Order 12866

Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
this 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.

Need for Federal Regulatory Action

    As noted above, these final regulations are needed to implement two 
programs created in the HERA. The ACG program provides need-based 
grants to encourage students to complete rigorous secondary school 
programs 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 
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 successful completion of 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. 
With respect to 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

[[Page 64417]]

 
    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 that institutions are already using for 
Federal Pell Grants. Accordingly, institutions wishing to participate 
in the new programs have already absorbed most of the administrative 
costs related to implementing these final regulations. Marginal costs 
over this baseline are primarily related to initial, and ongoing 
eligibility determinations are minimal. Most data needed to make these 
determinations, such as student citizenship, full-time status, major, 
and GPA, are generally already available to institutions.
    In response to the public comment on the interim final regulations, 
the Department has made changes in these final regulations. The only 
significant change with economic impact is to permit students to 
receive an ACG or National SMART Grant for a payment period during 
which they are not receiving a Federal Pell Grant. This change will 
enable 32,000 more students to receive grants in 2006. It will also 
increase the cost of the programs by $27 million in 2006 and by $145 
million between 2006-2010. The Secretary requested comments on the 
regulatory impact analysis in the interim final regulations, but 
received none.

Assumptions, Limitations, and Data Sources

    Because these final regulations largely restate statutory 
requirements that would be self-implementing in the absence of 
regulatory action, cost estimates provided above reflect a prestatutory 
baseline in which the ACG and National SMART Grant programs do not 
exist. Given the limited data available, estimates for 2007-2008 do not 
assume program benefits will induce increased student participation. 
Costs have been quantified for only two years because the Secretary 
plans to revise these final regulations through negotiated rule-making, 
after which more comprehensive cost analyses for subsequent years will 
be developed.
    In developing these estimates, data from the 2004 National 
Postsecondary Student Aid Survey was used to derive the percentage of 
students meeting initial eligibility requirements for ACG and National 
SMART Grant awards, including enrollment status, Federal Pell Grant 
eligibility, citizenship, academic major, and GPA. The 1994 National 
Education Longitudinal Study, 1996 Beginning Postsecondary Student 
Survey, and 2000 National Assessment of Educational Progress High 
School Transcript Study were used to derive the percentage of students 
otherwise eligible for an ACG who had successfully completed a rigorous 
secondary school program of study. All these studies were conducted by 
the National Center for Education Statistics.

Regulatory Alternatives Considered

    In defining eligibility requirements, particularly those related to 
rigorous secondary school programs of study, these final regulations 
strike a balance between complete State discretion, which could create 
confusion and regional inequalities and result in overly generous 
criteria that dramatically reduce award levels, and an overly 
prescriptive national determination that would significantly alter the 
traditional State role in determining secondary school curricula.
    More specifically, in considering the definition of a rigorous 
secondary school program of study, the Secretary considered a variety 
of combinations of coursework and other possible measures. For example, 
at the time of the release of the President's fiscal year 2007 budget, 
preliminary estimates assumed a rigorous program of study would consist 
of four English, three social science, three science, three 
mathematics, and two foreign language courses. Under this scenario, an 
estimated 439,000 students would receive $400 million in ACG awards in 
2006-2007--compared with $340 million to 420,000 students under these 
final regulations. In subsequently considering the recognition of 
rigorous secondary school programs, the Secretary determined it would 
be more appropriate to include as one option secondary school programs 
of study with specific coursework requirements, such as, for 
mathematics, algebra I and a higher level course such as algebra II, 
geometry, or data analysis and statistics, and for science, at least 
two years with one year each of biology, chemistry or physics, as well 
as an advanced or honors program. In addition, the Secretary included 
students who complete secondary school programs and receive specified 
scores on the Advanced Placement or International Baccalaureate 
examinations. The latter provisions offer additional flexibility to 
individual students attending private or home schools.
    This approach is consistent with the programs' statutory purpose of 
creating incentives for certain student behaviors. To achieve this 
purpose, the grant level must be large enough to provide a meaningful 
incentive, yet at the same time, program flexibility must be sufficient 
to allow States and participating institution to recognize broad 
differences in secondary school and higher education academic 
structures.
    Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and 
explain burdens specifically associated

[[Page 64418]]

with information collection requirements. See the heading Paperwork 
Reduction Act of 1995.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 2 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of these final regulations. 
This table provides our best estimate of the increase in Federal 
student aid payments as a result of these final regulations. All 
expenditures are classified as transfers to postsecondary students.

Table 2.--Accounting Statement: Classification of Estimated Expenditures
                              [in millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $694.
From Whom To Whom?                          Federal Government To
                                             Postsecondary Students.
------------------------------------------------------------------------

Paperwork Reduction Act of 1995

    We received no comments on the Paperwork Reduction Act portion of 
the interim final rule.
    OMB has approved the information collection requests identified in 
the interim final regulations and has assigned the following numbers to 
the collection of information in these final regulations: 1845-0001, 
1845-0039, 1845-0078.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. One of the objectives of the Executive 
order is to foster an intergovernmental partnership and a strengthened 
federalism. The Executive order relies on processes developed by State 
and local governments for coordination and review of proposed Federal 
financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.

Assessment of Educational Impact

    Based on our own review, we have determined that these final 
regulations do not require transmission of information that any other 
agency or authority of the United States gathers or makes available.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
http://www.ed.gov/news/Fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.


    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.


(Catalog of Federal Domestic Assistance Numbers: 84.375 Academic 
Competitiveness Grants; 84.376 National SMART Grants)

List of Subjects in 34 CFR Parts 668, 690, and 691

    Colleges and universities, Elementary and secondary education, 
Grant programs--education, Student aid.

    Dated: October 25, 2006.
Margaret Spellings,
Secretary of Education.

0
For the reasons discussed in the preamble, the Secretary amends parts 
668, 690, and 691 of title 34 of the Code of Federal Regulations as 
follows:

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
1. The authority citation for part 668 continues to read as follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1088, 1091, 1092, 
1094, 1099c, and 1099c-1, unless otherwise noted.


Sec.  668.2  [Amended]

0
2. Section 668.2 is amended in paragraph (b) in the definition of 
``Valid institutional student information report'' by removing the word 
``report'' and adding in its place the word ``record'' each place it 
appears.


Sec.  668.51  [Amended]

0
3. Section 668.51 is amended in paragraph (a) by adding the words 
``ACG, National SMART Grant,'' immediately after the words ``Federal 
Pell Grant,''.
0
4. Section 668.52 is amended by:
0
A. Revising the definition of ``Institutional student information 
report''.
0
B. Revising the definition of ``Student aid application.''
    The revisions read as follows:


Sec.  668.52  Definitions.

* * * * *
    Institutional student information record as defined in 34 CFR 690.2 
and 691.2 for purposes of the Federal Pell Grant, ACG, National SMART 
Grant, Federal Perkins Loan, FWS, FSEOG, Federal Stafford Loan, and 
William D. Ford Federal Direct Loan programs.
    Student aid application means an application approved by the 
Secretary and submitted by a person to have his or her EFC determined 
under the Federal Pell Grant, ACG, National SMART Grant, Federal 
Perkins Loan, FWS, FSEOG, Federal Stafford Loan, or William D. Ford 
Federal Direct Loan programs.
* * * * *


Sec.  668.54  [Amended]

0
5. Section 668.54 is amended in paragraph (a)(2)(i) by adding the words 
``ACG, National SMART Grant,'' immediately after the words ``Federal 
Pell Grant,''.


Sec.  668.55  [Amended]

0
6. Section 668.55 is amended by:
0
A. In the introductory text to paragraph (c), adding the words ``ACG, 
National SMART Grant,'' immediately after the words ``Federal Pell 
Grant,''.
0
B. In paragraph (c)(1), adding the words ``, ACG, National SMART 
Grant,'' immediately after the words ``Federal Pell Grant''.
0
C. In paragraph (c)(2), adding the words ``, ACG, National SMART 
Grant,'' immediately after the words ``Federal Pell Grant''; and by 
removing the punctuation ``,'' after the word ``campus-based''.


Sec.  668.58  [Amended]

0
7. Section 668.58 is amended by:
0
A. In paragraph (a)(1)(i), adding the words ``, ACG, National SMART 
Grant,'' immediately after the words ``Federal Pell Grant''.
0
B. In paragraph (a)(2)(i), adding the words ``ACG, National SMART 
Grant, or'' immediately after the words ``Federal Pell Grant,''.
0
C. In paragraph (a)(2)(ii)(A), adding the words ``ACG, National SMART 
Grant,'' immediately after the words ``Federal Pell Grant,''.


Sec.  668.59  [Amended]

0
8. Section 668.59 is amended by:
0
A. In the introductory text to paragraph (a), removing the words 
``Federal Pell Grant Program'' and adding, in their place, the words 
``Federal Pell Grant, ACG, and National SMART Grant programs''.

[[Page 64419]]

0
B. In paragraph (a)(1)(i), adding the words ``, ACG, or National SMART 
Grant'' immediately after the words ``Federal Pell Grant''.
0
C. In paragraph (a)(2) introductory text, adding the words ``, ACG, or 
National SMART Grant'' immediately after the words ``Federal Pell 
Grant''.
0
D. In the introductory text to paragraph (b), removing the words 
``Federal Pell Grant Program'' and adding, in their place, the words 
``Federal Pell Grant, ACG, and National SMART Grant programs''.
0
E. In paragraph (b)(1), adding the words ``, ACG, or National SMART 
Grant'' immediately after the words ``Federal Pell Grant''.
0
F. In paragraph (b)(2)(i)(B), adding the words ``, ACG, or National 
SMART Grant'' immediately after the words ``Federal Pell Grant''.
0
G. In paragraph (b)(2)(ii)(A), adding the words ``, ACG, or National 
SMART Grant'' immediately after the words ``Federal Pell Grant''.


Sec.  668.60  [Amended]

0
9. Section 668.60 is amended by:
0
A. In the introductory text to paragraph (c), removing the words 
``Federal Pell Grant Program'' and adding, in their place, the words 
``Federal Pell Grant, ACG, and National SMART Grant programs''.
0
B. In paragraph (c)(1), adding the words ``and 691.61'' immediately 
after the regulatory citation ``690.61''.
0
C. In paragraph (c)(2)(i), adding the words ``, ACG, or National SMART 
Grant'' immediately after the words ``Federal Pell Grant''.
0
D. In paragraph (c)(2)(ii), adding the words ``, ACG, or National SMART 
Grant'' immediately after the words ``Federal Pell Grant''.
0
E. In paragraph (d) by adding the words ``ACG, or National SMART Grant 
program assistance,'' immediately after the words ``Federal Pell 
Grant,''.


Sec.  668.61  [Amended]

0
10. Section 668.61 is amended in paragraph (a)(2)(ii)(B) by adding the 
words ``ACG, National SMART Grant,'' immediately after the words 
``Federal Pell Grant,''.

PART 690--FEDERAL PELL GRANT PROGRAM

0
11. The authority citation for part 690 continues to read as follows:

    Authority: 20 U.S.C. 1070a, unless otherwise noted.


Sec.  690.78  [Amended]

0
12. Section 690.78 is amended by removing paragraph (b) and 
redesignating paragraph (c) as paragraph (b).

PART 691--ACADEMIC COMPETITIVENESS GRANT (ACG) AND NATIONAL SCIENCE 
AND MATHEMATICS ACCESS TO RETAIN TALENT GRANT (NATIONAL SMART 
GRANT) PROGRAMS

0
13. The authority citation for part 691 continues to read as follows:

    Authority: 20 U.S.C. 1070a-1, unless otherwise noted.


0
14. Section 691.6 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  691.6  Duration of student eligibility--undergraduate course of 
study.

    (a) A student is eligible to receive up to one ACG Scheduled Award 
during each of the student's first and second academic years of 
enrollment over the course of the student's undergraduate education in 
all eligible programs as defined in Sec.  691.2(d).
    (b) A student is eligible to receive up to one National SMART Grant 
Scheduled Award during each of the student's third and fourth academic 
years of enrollment over the course of the student's undergraduate 
education in all eligible programs as defined in Sec.  691.2(d).
* * * * *

0
15. Section 691.15 is amended by:
0
A. In paragraph (a)(2), removing the words ``for the same payment 
period'' and adding, in their place, the words ``in the same award 
year''.
0
B. Revising paragraph (b)(1)(ii)(B).
0
C. In paragraph (b)(1)(iii)(C), removing the words ``at least''.
0
D. In paragraph (c)(3), removing the words ``at least''.
    The revision reads as follows:


Sec.  691.15  Eligibility to receive a grant.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (B) Has not previously been enrolled as a regular student in an 
eligible program while enrolled in high school;
* * * * *

0
16. Section 691.16 is amended in paragraph (d)(4) by removing the words 
``in the'' and adding, in their place, the words ``from an''.


Sec.  691.62  [Amended]

0
17. Section 691.62 is amended in paragraph (c) by removing the 
regulatory citations ``, 682.200(b), and 685.102(b)''.


Sec.  691.65  [Amended]

0
18. Section 691.65 is amended in paragraph (a)(2) by removing the words 
``for the same payment period'' and adding, in their place, the words 
``in the same award year''.


Sec.  691.75  [Amended]

0
19. Section 691.75 is amended by:
0
A. In paragraph (b)(3), removing the words ``is no longer pursuing'' 
and adding, in their place, the words ``is not pursuing''.
0
B. In paragraph (c), removing the words ``is no longer pursuing'' and 
adding, in their place, the words ``is not pursuing''.


Sec.  691.78  [Amended]

0
20. Section 691.78 is amended by removing paragraph (b) and 
redesignating paragraph (c) as paragraph (b).

0
21. Section 691.80(a) is revised to read as follows:


Sec.  691.80  Redetermination of eligibility for a grant award.

    (a) Change in receipt of Federal Pell Grant. If, after the 
beginning of an award year, a student otherwise eligible for an ACG or 
a National SMART Grant begins or ceases to receive a Federal Pell Grant 
in that award year, the institution must redetermine the student's 
eligibility for an ACG or a National SMART Grant in that award year.
* * * * *
 [FR Doc. E6-18197 Filed 10-31-06; 8:45 am]
BILLING CODE 4000-01-P