[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Proposed Rules]
[Pages 44050-44065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15306]


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DEPARTMENT OF EDUCATION

34 CFR Part 691

[Docket ID ED-2007-OPE-0135]
RIN 1840-AC92


Academic Competitiveness Grant Program and National Science and 
Mathematics Access To Retain Talent Grant Program

AGENCY: Office of Postsecondary Education, Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to amend the regulations for the 
Academic Competitiveness Grant (ACG) and National Science and 
Mathematics Access to Retain Talent Grant (National SMART Grant) 
programs. The Secretary is amending these regulations to reduce 
administrative burden for program participants and to clarify program 
requirements.

DATES: We must receive your comments on or before September 6, 2007.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or by e-mail. Please submit your comments only 
one time, in order to ensure that we do not receive duplicate copies. 
In addition, please include the Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Under ``Search Documents'' go to ``Optional Step 
2'' and select ``Department of Education'' from the ``Federal 
Department or Agency'' drop-down menu, then click ``Submit.'' In the 
Docket ID column, select ED-2007-OPE-0135 to add or view public 
comments and to view supporting and related materials available 
electronically. Information on using Regulations.gov, including 
instructions for submitting comments, accessing documents, and viewing 
the docket after the close of the comment period, is available through 
the site's ``User Tips'' link.
     Postal Mail, Commercial Delivery, or Hand Delivery. If you 
mail or deliver your comments about these proposed regulations, address 
them to Sophia McArdle, U.S. Department of Education, 1990 K Street, 
NW., room 8019, Washington, DC 20006-8544.
    Privacy Note: The Department's policy for comments received from 
members of the public (including those comments submitted by mail, 
commercial delivery, or hand delivery) is to make these submissions 
available for public viewing on the Federal eRulemaking Portal at 
http://www.regulations.gov. All submissions will be posted to the 
Federal eRulemaking Portal without change, including personal 
identifiers and contact information.

FOR FURTHER INFORMATION CONTACT: 

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                 Topic                    Contact person and information
------------------------------------------------------------------------
General information and information      Sophia McArdle. Telephone:
 related to recognition of rigorous       (202) 219-7078 or via the
 secondary school programs and eligible   Internet:
 majors.                                  [email protected].
Information related to successful        Jacquelyn Butler. Telephone:
 completion of a rigorous secondary       (202) 502-7890 or via the
 school program.                          Internet:
                                          [email protected].
Information related to grade point       Anthony Jones. Telephone: (202)
 average.                                 502-7652 or via the Internet:
                                          [email protected].
Information related to academic year     Fred Sellers. Telephone: (202)
 progression and prior enrollment.        502-7502 or via the Internet:
                                          [email protected].
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    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 first contact person listed under FOR 
FURTHER INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION:

Invitation to Comment

    As outlined in the section of this notice entitled ``Negotiated 
Rulemaking,'' significant public

[[Page 44051]]

participation, through four public hearings and three negotiated 
rulemaking sessions, has occurred in developing this NPRM. Therefore, 
in accordance with the requirements of the Administrative Procedure 
Act, the Department invites you to submit comments regarding these 
proposed regulations within 30 days. To ensure that your comments have 
maximum effect in developing the final regulations, we urge you to 
identify clearly the specific section or sections of the proposed 
regulations that each of your comments addresses and to arrange your 
comments in the same order as the proposed regulations.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations by accessing Regulations.gov. 
You may also inspect the comments, in person, in room 8019, 1990 K 
Street, NW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., 
Eastern time, Monday through Friday of each week except Federal 
holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please contact the first 
person listed under FOR FURTHER INFORMATION CONTACT.

Negotiated Rulemaking

    Section 492 of the Higher Education Act of 1965, as amended (HEA), 
requires the Secretary, before publishing any proposed regulations for 
programs authorized by Title IV of the HEA (Title IV, HEA programs), to 
obtain public involvement in the development of the proposed 
regulations. After obtaining advice and recommendations from 
individuals and representatives of groups involved in the Federal 
student financial assistance programs, the Secretary must subject the 
proposed regulations for the Title IV, HEA programs to a negotiated 
rulemaking process. The proposed regulations that the Department 
publishes must conform to final agreements resulting from that process 
unless the Secretary reopens the process or provides a written 
explanation to the participants in that process stating why the 
Secretary has decided to depart from the agreements. Further 
information on the negotiated rulemaking process can be found at: 
http://www.ed.gov/policy/highered/reg/hearulemaking/2007/nr.html.
    On August 18, 2006, the Department published a notice in the 
Federal Register (71 FR 47756) announcing our intent to establish up to 
four negotiated rulemaking committees to prepare proposed regulations. 
One committee would focus on issues related to the ACG and National 
SMART Grant programs. A second committee would address issues related 
to the Federal student loan programs. A third committee would address 
programmatic, institutional eligibility, and general provisions issues. 
Lastly, a fourth committee would address accreditation. The notice 
requested nominations of individuals for membership on the committees 
who could represent the interests of key stakeholder constituencies on 
each committee. The four committees met to develop proposed regulations 
over the course of several months, beginning in December 2006. This 
NPRM proposes regulations relating to the ACG and National SMART Grant 
programs that were discussed by the first committee mentioned in this 
paragraph (the ``ACG and National SMART Grant Committee'').
    The Department developed a list of proposed regulatory changes from 
advice and recommendations submitted by individuals and organizations 
in testimony submitted to the Department in a series of four public 
hearings held on:
     September 19, 2006, at the University of California-
Berkeley in Berkeley, California.
     October 5, 2006, at the Loyola University in Chicago, 
Illinois.
     November 2, 2006, at the Royal Pacific Hotel Conference 
Center in Orlando, Florida.
     November 8, 2006, at the U.S. Department of Education in 
Washington, DC.
    In addition, the Department accepted written comments on possible 
regulatory changes submitted directly to the Department by interested 
parties and organizations. All regional meetings and a summary of all 
comments received orally and in writing are posted as background 
material in the docket and can also be accessed at http://www.ed.gov/policy/highered/reg/hearulemaking/2007/hearings.html. Staff within the 
Department also identified issues for discussion and negotiation.
    The members of the ACG and National SMART Grant Committee were:
     Gabriel Pendas, United States Students Association, and 
Justin McMartin, Minnesota State Colleges and Universities (alternate).
     George Chin, City University of New York, and Catherine 
Simoneaux, Loyola University New Orleans (alternate).
     Thomas Babel, DeVry, Incorporated, and Matthew Hamill, 
National Association of College and University Business Officers 
(alternate).
     Margaret Heisel, University of California, and Katherine 
Haley Will, Gettysburg College (alternate).
     Cecilia Cunningham, Middle College National Consortium, 
and Tim Martin, University of Arkansas (alternate).
     Lee Carrillo, Central New Mexico Community College, and 
Patricia Hurley, Glendale Community College (alternate).
     June Streckfus, Maryland Business Roundtable for 
Education, and Denise Hedrick, Educational Collaborative (alternate).
     Stanley Jones, Indiana Commission for Higher Education.
     Joan Wodiska, National Governors Association, and Robin 
Gelinas, Texas Education Agency (alternate).
     Mary Beth Kelly, Pennsylvania Higher Education Assistance 
Agency.
     Linda France, Kentucky Department of Education, and Wandra 
Polk, North Carolina Department of Public Instruction (alternate).
     Joe McTighe, Council for American Private Education, and 
William Estrada, Home School Legal Defense Association (alternate).
     Elaine Copeland, Clinton Junior College.
     Bill Lucia, Educational Testing Service, and Nancy Segal, 
ACT (alternate).
     Carney McCullough, U.S. Department of Education.
    During its meetings, the ACG and National SMART Grant Committee 
reviewed and discussed drafts of proposed regulations. It did not reach 
consensus on the proposed regulations in this NPRM. More information on 
the work of this committee can be found at: http://www.ed.gov/policy/highered/reg/hearulemaking/2007/acg.html.

[[Page 44052]]

Significant Proposed Regulations

    We discuss substantive issues by subject matter. Generally, we do 
not address proposed regulatory provisions that are technical or 
otherwise minor in effect.

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

    Statute: Section 401A(c)(3)(A), (B), (C), and (d)(2) of the HEA 
requires that a student's eligibility for an ACG or National SMART 
Grant be based on the student's progression in academic years during 
the student's enrollment in an undergraduate program of study. For 
purposes of any program under Title IV of the HEA, which includes the 
ACG and National SMART Grant programs, section 481(a)(2) of the HEA 
defines an academic year based on two minimum measures--weeks of 
instructional time and credit or clock hours. Under section 481(a)(2) 
of the HEA, an academic year for an undergraduate program of study must 
be at least: (1) 30 weeks of instructional time for a course of study 
that measures its program length in credit hours, or 26 weeks of 
instructional time for a course of study that measures its program 
length in clock hours; and (2) 24 semester credit hours, 36 quarter 
credit hours, or 900 clock hours. Accordingly, a student may be 
eligible for an ACG during the first and second academic years of the 
student's undergraduate education and for a National SMART Grant during 
the third and fourth academic years of the student's undergraduate 
education. Section 401A(d)(2)(B) makes clear that a student may not 
receive more than two ACGs and two National SMART Grants.

General (Sec.  691.6(a), (b), and (c))

    Current Regulations: Under current Sec.  691.6(a), (b), and (c) an 
institution must determine a student's eligibility for ACGs and 
National SMART Grants by determining the student's academic year 
progression, taking into account the student's attendance in all ACG 
and National SMART Grant eligible programs at all institutions attended 
by the student during the course of that student's undergraduate 
education. Thus, under the current regulations, a student's academic 
year progression is not based on the student's enrollment in each 
eligible program separately, but rather is based on all eligible 
programs at all institutions in which a student has enrolled over the 
course of the student's undergraduate education. Under the current 
regulations, an institution must determine whether a student's previous 
enrollment, as measured in both weeks of instructional time and credit 
or clock hours, affects the student's eligibility for an ACG or 
National SMART Grant in an academic year. For example, consider a 
student who completes the weeks and hours of an academic year over 
three semesters at one institution while enrolled in an ACG eligible 
program. Although the student attended the institution on a full-time 
basis for only one semester and received only half of the first-year 
ACG, under the current regulations, because the student completed the 
weeks and hours of an academic year, the student is no longer eligible 
as a first-year student at any institution. If the student transferred 
to another institution and that institution accepted less than the 
credit hours of an academic year for that student, for purposes of 
determining ACG eligibility, the student would be unable to receive the 
second half of the first-year ACG because the student is considered to 
have completed the first academic year in an ACG eligible program.
    Proposed Regulations: We are proposing to revise current Sec.  
691.6(a), (b), and (c) to require an institution to determine a 
student's academic year progression based on the student's attendance 
in all ACG and National SMART Grant eligible programs only at the 
institution in which the student is currently enrolled. Under the 
proposed regulations, the student who completes the weeks and hours of 
an academic year over three semesters at one institution while enrolled 
in an ACG eligible program may be eligible to receive the remaining 
portion of the first-year ACG at another institution upon transfer if 
the second institution determines that the student has remaining 
eligibility for a first-academic-year Scheduled Award and considers the 
student to be enrolled in the first academic year of an ACG eligible 
program because it accepted less than an academic year in credit hours.
    Reason: We are proposing these changes because we believe that they 
would reduce the administrative burden for institutions implementing 
the ACG and National SMART Grant programs.
    During negotiated rulemaking, the Committee discussed the issue of 
academic year progression at length. Many of the non-Federal 
negotiators were concerned about the impact the regulations would have 
on a student's eligibility and the resulting difficulties for 
institutions administering the grant programs. Specifically, many of 
the non-Federal negotiators asked the Department to interpret the terms 
``first academic year,'' ``second academic year,'' ``third academic 
year,'' and ``fourth academic year'' in section 401A of the HEA as a 
student's grade level (e.g., freshman, sophomore, junior and senior 
years).
    Given that section 481(a)(2) of the HEA specifically describes the 
minimal requirements for an ``academic year'' for purposes of any Title 
IV, HEA program and that the ACG and National SMART Grant programs are 
Title IV, HEA programs, the Department is unable to interpret the term 
``academic year'' in any way that would be contrary to the statutory 
requirements in section 481(a)(2) of the HEA. Many of the non-Federal 
negotiators disagreed with the Department's position and suggested that 
the Department has taken a more flexible approach when defining a 
``year'' in other contexts. For example, 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. We have 
interpreted the term ``successfully completed the first year of a 
program of undergraduate education'' in section 428 of the HEA to 
relate to a student's grade level, as determined by the institution. We 
have the authority to interpret the statutory language in this way 
because Congress had not provided us with a statutory definition of the 
term ``first year.'' In contrast, Congress clearly defines the minimum 
requirements of an ``academic year'' in section 481(a)(2) of the HEA. 
Accordingly, we are unable to interpret ``academic year'' as the 
student's grade level for purposes of the ACG and National SMART Grant 
programs because it would be contrary to the HEA.
    We appreciate the impact of administering the academic year 
progression requirements for the ACG and National SMART Grant programs 
on institutions and share the objective of reducing the administrative 
burden of the programs. We believe that the proposed regulations, which 
require an institution to determine a student's academic year 
progression during the student's attendance in all ACG and National 
SMART Grant eligible programs only at the institution in which the 
student is currently enrolled, would simplify the academic year 
progression analysis for the institution, especially when administering 
aid for transfer students, as discussed in the following section.

Transfer Student (Sec.  691.6(d))

    Current Regulations: None.
    Proposed Regulations: We propose to modify Sec.  691.6(d) to 
codify, with changes, the guidance provided in the preamble of the 
November 1, 2006 final regulations (71 FR 64401, 64405). Proposed Sec.  
691.6(d)(3) would provide that when determining the appropriate

[[Page 44053]]

academic year for a transfer student, the institution to which the 
student transferred must count both (a) the number of credit or clock 
hours earned by the student at prior institutions that are accepted for 
the student, and (b) an estimated number of weeks of instructional time 
completed by the student. Under the proposed regulations, the estimated 
number of weeks of instructional time that are counted must correspond 
to the credit or clock hours accepted in the same ratio as the weeks of 
instructional time in the eligible program's academic year is to the 
credit or clock hours in the academic year of the student's ACG or 
National SMART Grant eligible program. To determine how many weeks of 
instructional time to count, proposed Sec.  691.6(d)(3)(ii) would 
require that an institution multiply the number of credit or clock 
hours that the institution accepted on transfer, except as prohibited 
under Sec.  691.6(d)(2), by the number of weeks of instructional time 
in the academic year and divide the product of the multiplication by 
the credit or clock hours in the academic year. For example, consider 
an institution that accepts 12 semester hours on transfer into a 
student's eligible program that has an academic year of 24 semester 
hours and 30 weeks of instructional time. The institution would 
determine the estimated weeks of instructional time associated with the 
12 semester hours by multiplying 12 times 30, which would equal 360, 
and dividing 360 by 24 and determine that the student is considered to 
have completed 15 weeks of instructional time based on the 12 hours 
transferred. Under these proposed regulations, institutions may not 
include in this estimate credit or clock hours that were not earned in 
an ACG or National SMART Grant eligible program.
    Reason: We propose adding Sec.  691.6(d)(3) because we believe this 
change would facilitate the implementation of proposed Sec.  691.6(a), 
(b), and (c) by clarifying how an institution would determine the 
academic year progression--both in terms of credit and clock hours and 
weeks of instructional time--of students who transfer to the 
institution.

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

    Current Regulations: Section 691.6(d) of the current regulations 
allows programs with traditional academic calendars (i.e., programs for 
which an institution determines payments under current Sec.  691.63(b) 
and (c)) to treat summer terms as the same length as other terms when 
counting weeks of instructional time for purposes of determining a 
student's eligibility for an ACG or National SMART Grant. For these 
programs, ``traditional academic calendars'' are calendars that consist 
of two semesters or three quarters in the fall through spring and have 
a summer term with a minimum full-time enrollment standard of 12 
semester or 12 quarter hours.
    Proposed Regulations: We propose to remove current Sec.  691.6(d) 
because this provision would be superseded by the alternative methods 
of determining weeks of instructional time included in proposed Sec.  
691.6(f), (g) and (h).
    For programs with traditional academic calendars, proposed Sec.  
691.6(e)(2) would provide three alternative methods for determining the 
weeks of instructional time for a student's academic year progression. 
These methods would allow institutions with traditional academic 
calendar programs, based on specified criteria that assure general 
compliance with the academic year requirements, to (a) count weeks of 
instructional time based on the number of terms the student has 
attended, (b) attribute weeks of instructional time to the credit hours 
earned by the student, or (c) use the student's grade level as a basis 
for determining weeks of instructional time completed. Because these 
alternatives would not apply to eligible programs without traditional 
academic calendars, an institution would always be required to provide 
an exact determination of student academic year progression for these 
nontraditional programs.
    Under the ``terms-attended'' alternative reflected in proposed 
Sec.  691.6(f), an institution would determine the weeks of 
instructional time a student has attended at the institution based on 
the number of terms the student has attended. For each term completed, 
a student in an eligible program would be considered to have completed 
the same portion of an academic year (in weeks of instructional time) 
as the portion of the academic year used to calculate the student's 
payment for a payment period. For example, consider an eligible program 
with two semesters with 15 weeks of instructional time in each term and 
a summer term of 12 weeks of instructional time that has a defined 
academic year of 24 semester credit hours and 30 weeks of instructional 
time. A payment for a payment period in this eligible program would be 
one-half of a student's Scheduled Award under current Sec.  691.63(b). 
Under proposed Sec.  691.6(f), a student in this eligible program who 
has completed four consecutive terms, including a summer term, may be 
considered to have completed 60 weeks of instructional time without 
reference to the number of credits earned in those terms. The 
institution must, under Sec.  691.6(a), determine both the number of 
credit hours the student earned as well as the weeks of instructional 
time completed by the student in order to determine the student's 
academic year progression. So, if the student in the example in this 
paragraph completed four terms with only six credits in each term, that 
student would not have been eligible for a first-year ACG because the 
student was enrolled as a less-than-full-time student. That student, 
therefore, would be considered a second-year student at the end of the 
fourth term despite the fact that the student completed the equivalent 
of two academic years in weeks of instructional time under the ``terms-
attended'' alternative. This is because a student must meet both the 
``weeks of instructional time'' and ``credit or clock hours'' 
requirements to progress from one academic year to the next. The 
student in this example did not meet the credit or clock hours 
requirement necessary to progress to third-year status. Therefore, 
regardless of the number of weeks of instructional time the student 
completed, he or she is not considered a third-year student. Based on 
both weeks of instructional time and credit hours, the student is a 
second-year student.
    Under the ``credits-earned'' alternative reflected in proposed 
Sec.  691.6(g), an institution would determine the weeks of 
instructional time that a student has attended based on the credit 
hours the student actually earned in his or her ACG or National SMART 
Grant eligible program. The weeks of instructional time attended would 
be considered to be in the same proportion to weeks of instructional 
time in the academic year as the credit hours that the student has 
earned are in proportion to the credit hours in the academic year. For 
example, consider an eligible program with two semesters with 16 weeks 
of instructional time in each term and a summer term of 12 weeks of 
instructional time that has an academic year of 30 semester credit 
hours and 32 weeks of instructional time. Under proposed Sec.  
691.6(g), a student who earned 60 credit hours in this eligible program 
would be considered to have completed 64 weeks of instructional time, 
while a student who earned 45 credit hours in this eligible program 
would be considered to have completed 48 weeks of

[[Page 44054]]

instructional time. The student who had earned 60 credit hours would be 
considered to have completed his or her second academic year, while the 
student who had earned 45 credit hours would still be considered to be 
in his or her second academic year.
    To use the ``grade-level'' alternative reflected in proposed Sec.  
691.6(h)(1), an eligible program must qualify under proposed Sec.  
691.6(h)(1)(ii) and (2)(i) by establishing that at least two-thirds of 
the full-time students in the program are completing at least the weeks 
of instructional time in the academic year for each grade level 
completed. Thus, under this alternative method, a student who completes 
a grade level at the institution is considered to have completed the 
academic years through that grade level in weeks of instructional time 
as long as the student has also earned at least the minimum number of 
credit hours for the academic year. For example, consider an eligible 
program with two semesters with 15 weeks of instructional time in each 
term and a summer term of 12 weeks of instructional time that has an 
academic year of 24 semester hours and 30 weeks of instructional time. 
The institution considers a student in this eligible program to advance 
in grade level after earning 30 semester hours. Thus, under the 
``grade-level'' alternative method, a student who has earned 60 credit 
hours would be classified as a junior in a National SMART Grant 
eligible program. As a junior, the student would be considered to have 
completed the weeks of instructional time of the first and second 
academic years because the student also would have met the credit hour 
requirement at the institution by earning 60 semester hours, which is 
more than the minimum number of credit hours required for two academic 
years (in this example, the minimum credit hours would be 48 semester 
hours).
    Under proposed Sec.  691.6(d)(2), the ``credits-earned'' and 
``grade-level'' alternative methods reflected in proposed Sec.  
691.6(g) and (h), respectively, would not permit an institution to 
allocate weeks of instructional time to certain credits that were not 
earned at postsecondary institutions or as part of an ACG or National 
SMART Grant eligible program, as discussed under the next heading 
Limitations on Determining Weeks of Instructional Time.
    In addition, under proposed Sec.  691.6(e)(2)(ii), an institution 
that chooses to use one of the alternative methods of determining weeks 
of instructional time would need to do so for all students enrolled in 
the eligible program. Under proposed Sec.  691.6(e)(3), upon request 
from a student, an institution must also provide an exact determination 
of the academic progression for that student. An exact accounting of 
academic year progression for a student would always preempt any use of 
the three alternative methods for determining the weeks of 
instructional time that the student has attended. We discuss the 
requirements of proposed Sec.  691.6(e)(3) in more detail in the 
Student Request to Determine Academic Year Level section of this 
notice.
    Reason: We propose the changes reflected in Sec.  691.6(f), (g) and 
(h) because we believe that the proposed alternative methods for 
determining weeks of instructional time would help alleviate the 
administrative burden on institutions, especially those with 
traditional academic calendars, to calculate the weeks of instructional 
time component of a student's academic year progression.

Limitations on Determining Weeks of Instructional Time (Sec.  
691.6(d)(2))

    Current Regulations: None.
    Proposed Regulations: In proposed Sec.  691.6(d)(2), we make clear 
that an institution may not assign any weeks of instructional time to 
credit or clock hours accepted toward meeting a student's eligible 
program if the student earned (a) the credit or clock hours from 
Advanced Placement (AP) programs, International Baccalaureate (IB) 
programs, testing out, life experience, or other similar competency 
measures, (b) the credit or clock hours while not enrolled as a regular 
student in an ACG or National SMART Grant eligible program, or (c) the 
credit or clock hours for coursework that is not at the postsecondary 
level, such as remedial coursework. Under these proposed regulations, 
an institution could not consider these credits when determining a 
student's weeks of instructional time under an exact accounting. 
Moreover, an institution would not be permitted to assign any weeks of 
instructional time to these credits when determining a transfer 
student's academic year progression, or when determining any student's 
academic year progression under the ``credits-earned'' or ``grade-
level'' alternate methods reflected in proposed Sec.  691.6(g) and 
Sec.  691.6(h), respectively. Proposed Sec.  691.6(d)(2)(ii) would 
provide an exception that would require an institution to assign weeks 
of instructional time to determine National SMART Grant eligibility for 
periods in which a student was enrolled in an ACG eligible program 
prior to declaring, or certifying his or her intent to declare, an 
eligible major.
    Reason: Students earn the credits described in proposed Sec.  
691.6(d)(2)(i)(A) through (C) while not enrolled in an ACG or National 
SMART Grant eligible program, and, therefore, these credits do not have 
weeks of instructional time in an ACG or National SMART Grant eligible 
program associated with them. Proposed Sec.  691.6(d)(2)(i) is intended 
to ensure that an institution accurately determines a student's 
academic year progression in his or her ACG or National SMART Grant 
eligible program. We believe that excluding the credits described in 
proposed Sec.  691.6(d)(2)(i)(A) through (C) from the calculation of 
weeks of instructional time is appropriate because it would treat 
students consistently and would preserve two full years of ACG 
eligibility for many students who might otherwise have such credits 
counted in a way that could make them ineligible for a first-year ACG. 
We also believe that it is appropriate to consider weeks of 
instructional time completed by a student while enrolled in an ACG 
eligible program in determining a student's academic year progression 
for National SMART Grants.

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

    Current Regulations: None.
    Proposed Regulations: In proposed Sec.  691.6(e)(2)(iii), we have 
added language to clarify that a student can request and receive an 
exact determination of the student's academic year standing at an 
institution based on his or her attendance in all ACG and National 
SMART Grant eligible programs at that institution and on any qualifying 
credit hours accepted on transfer into the student's ACG or National 
SMART Grant eligible program. Proposed Sec.  691.6(e)(3) also would 
provide that if an institution performs an exact accounting of a 
student's standing, it may not use any of the alternative methods in 
proposed Sec.  691.6(f), (g) and (h) for determining that student's 
academic year standing.
    Reason: We believe that it is appropriate to add proposed Sec.  
691.6(e) to the regulations because we consider an exact determination 
of the weeks of instructional time completed by a student to always be 
the best evaluation of that student's academic year standing when 
determining the student's eligibility for an ACG or National SMART 
Grant. We encourage institutions to use an exact determination whenever 
possible because it is necessarily more accurate than any of the 
estimates obtained

[[Page 44055]]

under the alternative methods reflected in proposed Sec.  691.6(f), (g) 
and (h).

Grade Point Average (GPA) (Sec.  691.15)

    Statute: Section 401A(c) of the HEA establishes the general 
criteria for a student's eligibility for payment under the ACG and 
National SMART Grant Programs. Section 401A(c)(3)(B)(ii) of the HEA 
requires a student to have obtained a cumulative GPA of at least 3.0 
(or the equivalent as determined under regulations prescribed by the 
Secretary) at the end of the student's first academic year in order to 
be eligible for ACG funds during the student's second academic year of 
a program of undergraduate education. For a student to be eligible to 
receive a National SMART Grant award for the third and fourth academic 
years, section 401A(c)(3)(C)(ii) of the HEA requires a student to have 
obtained a cumulative GPA of at least 3.0 (or the equivalent as 
determined under regulations prescribed by the Secretary) in the 
coursework required for the eligible major.

Numeric Equivalent (Sec.  691.15(b)(1)(iii)(D), 691.15(c)(3), and 
691.15(g))

    Current Regulations: Under current Sec.  691.15(b)(1)(iii)(C), to 
receive second-year ACG funds, a student must have obtained a GPA of 
3.0 or higher on a 4.0 scale, or the equivalent, for the first academic 
year of the student's enrollment in an ACG eligible program. Under 
current Sec.  691.15(c)(3), to receive a National SMART Grant, a 
student must have obtained, through the most recently completed payment 
period, a cumulative GPA of 3.0 or higher on a 4.0 scale, or the 
equivalent, in the student's National SMART Grant eligible program.
    Proposed Regulations: We propose to revise Sec.  691.15 by 
clarifying in proposed Sec.  691.15(b)(1)(iii)(D) and (c)(3) that, for 
purposes of eligibility for ACG and National SMART Grants, institutions 
that assess grade point averages on a numeric scale other than a 4.0 
scale must ensure that the minimum GPA requirement on that scale is the 
numeric equivalent of a cumulative GPA of 3.0 or higher on a 4.0 scale. 
We also propose to add a new Sec.  691.15(g) providing minimum 
standards for determining numeric equivalencies for purposes of the ACG 
and National SMART Grant programs.
    Reason: During negotiated rulemaking, the non-Federal negotiators 
requested that the Department clarify the meaning of the words ``or the 
equivalent'' in current Sec.  691.15(b)(1)(iii)(C) and (c)(3). Some of 
the non-Federal negotiators asked whether the ``or the equivalent'' 
language meant that an institution could determine its own equivalency 
of a grading scale or simply an equivalent measure on a different 
numeric scale. We believe Congress clearly intended for the equivalency 
to relate to an objective means of assessing a student's GPA and not to 
permit institutions to use a subjective measure. The non-Federal 
negotiators discussed this topic and, ultimately, agreed with the 
Department's interpretation of the HEA.
    In accordance with proposed Sec.  691.15(g), an institution that 
has one or more academic programs that measure academic performance 
using alternatives to standard numeric grading procedures would be 
required to develop and apply an academically defensible equivalency 
policy with a numeric scale for purposes of determining student 
eligibility under the ACG and National SMART Grant programs. That 
equivalency policy would need to be in writing and available to 
students upon request. The policy would also need to include clear 
differentiations of student performance to support a determination that 
a student has performed, in his or her ACG or National SMART Grant 
program, at a level commensurate with at least a 3.0 GPA on a 4.0 
scale. Generally, a grading policy that includes only ``satisfactory/
unsatisfactory'', ``pass/fail'', or other similar nonnumeric 
assessments would not be a numeric equivalent under the proposed 
regulations. However, such assessments would be considered numeric 
equivalents if the institution could demonstrate that the ``pass'' or 
``satisfactory'' standard has the numeric equivalent of at least a 3.0 
GPA on a 4.0 scale, or that a student's performance for tests and 
assignments in the ACG or National SMART Grant program yielded a 
numeric equivalent of a 3.0 GPA on a 4.0 scale. Under proposed Sec.  
691.15(g), the institution's equivalency policies would need to be 
consistent with any other standards that the institution may have 
developed for academic and other Title IV, HEA program purposes, such 
as graduate school applications, scholarship eligibility, and insurance 
certifications, to the extent such standards distinguish among various 
levels of a student's academic performance.

Transfer GPA--ACG (Sec.  691.15(f)(1))

    Current Regulations: In the case of a transfer student who has 
completed the first academic year of enrollment in an ACG eligible 
program at the prior institution, for the first payment period of 
enrollment at the institution to which the student transfers, current 
Sec.  691.15(d)(1) provides that the institution must calculate the 
student's GPA using the grades earned by the student in the coursework 
from any prior institution accepted toward the student's ACG eligible 
program, regardless of the number of weeks associated with the credit 
or clock hours accepted for the student on transfer. In instances when 
a student completes his or her first academic year after transferring, 
institutions have been able to use their own policies on how transfer 
credits are counted to determine whether the grades for the transfer 
credits are included in the GPA calculated to determine the student's 
eligibility for another ACG award.
    Proposed Regulations: Proposed Sec.  691.15(f)(1)(i) would provide 
that, for a student who transfers to an institution that accepts at 
least the credit or clock hours for an entire academic year, but less 
than for two academic years, the GPA to determine second-year 
eligibility is calculated using the grades from all coursework accepted 
by the current institution into the student's eligible program. Under 
proposed Sec.  691.15(f)(1)(ii), for a student who transfers to an 
institution that accepts less than the credit or clock hours for an 
academic year from all prior postsecondary institutions attended by the 
student, the GPA to determine second-year eligibility is calculated by 
combining the grades from all coursework accepted on transfer by the 
current institution into the student's eligible program with the grades 
for coursework earned at the current institution through the payment 
period in which the student completes the credit or clock hours for the 
student's first academic year in the eligible program. In conjunction 
with the proposed changes to Sec.  691.6(a), (b), and (c), an 
institution would no longer consider a student's GPA from the student's 
first academic year in an eligible program at another institution.
    Reason: The changes in proposed Sec.  691.15(f)(1) are being made 
in response to requests from the non-Federal negotiators to clarify how 
to determine the GPA for transfer students. The non-Federal negotiators 
said that the GPA calculations for the ACG and National SMART Grant 
programs were confusing because the programs have different 
requirements. The non-Federal negotiators also sought to reduce the 
administrative burden on institutions when determining transfer student 
GPA for ACGs.
    Proposed Sec.  691.15(f)(1) would clarify that, for a second-year 
ACG, the GPA

[[Page 44056]]

must be calculated at the end of the student's first academic year (in 
contrast to the requirement under the National SMART Grant Program that 
a 3.0 cumulative GPA be maintained for every payment period). The 
requirement that the GPA for a transfer student be determined based on 
the coursework accepted into the ACG-eligible program at the current 
institution, which is reflected in proposed Sec.  691.15(f)(1)(i), 
would clarify that an institution only needs to track the coursework it 
accepts into the student's ACG-eligible program. Finally, under 
proposed Sec.  691.15(f)(1)(ii), an institution could combine grades 
from coursework earned at prior institutions with grades from 
coursework earned at the current institution to calculate the GPA for 
the first academic year in an ACG eligible program for the purpose of 
establishing eligibility for the second-year ACG in a way that 
minimizes institutional burden.

Transfer GPA--National SMART Grant (Sec.  691.15(f)(2))

    Current Regulations: Current Sec.  691.15(c)(3) states that, in 
order to be eligible to receive a National SMART Grant for the third or 
fourth academic year of the student's eligible program, the student 
must have a cumulative GPA through the most-recently completed payment 
period of at least 3.0 or higher on a 4.0 scale, or the equivalent, 
consistent with other institutional measures for academic and Title IV, 
HEA program purposes, in the student's National SMART Grant eligible 
program. For a transfer student, current Sec.  691.15(d) requires an 
institution to calculate the student's GPA for the student's first 
payment period of enrollment using the grades earned by the student in 
the coursework from any prior institution that it accepts towards the 
student's National SMART Grant eligible program if the student would be 
otherwise eligible for a National SMART Grant. However, under current 
Sec.  691.15(d)(2), if the institution accepts no credits towards the 
student's eligible program, the institution must consider the student 
to be ineligible for National SMART Grant funds until the student 
completes at least one payment period in an eligible program with a 
qualifying GPA. Under the current regulatory framework, after the 
initial payment period, an institution should calculate a student's GPA 
consistent with its other measures for academic and Title IV, HEA 
program purposes.
    Proposed Regulations: Under proposed Sec.  691.15(f)(2), if a 
student transfers from one institution to an institution at which the 
student is eligible for a National SMART Grant, the institution to 
which the student transfers would be required to determine that 
student's eligibility for the first payment period using one of two 
methods, whichever method coincides with the institution's academic 
policy.
    Under the first method, which is reflected in proposed Sec.  
691.15(f)(2)(i)(A), if an institution's academic policy does not 
incorporate grades from coursework that it accepts on transfer into the 
student's GPA at that institution, then it would be required to 
calculate the student's GPA for the first payment period of enrollment 
using the grades earned by the student in the coursework from any prior 
postsecondary institution that it accepts toward the student's National 
SMART Grant eligible program. That GPA would be used only for the first 
payment period of the student's program. The institution would then be 
required to apply its academic policy for subsequent payment periods 
and not incorporate, into the student's GPA, the student's grades from 
the coursework the institution accepts on transfer.
    Under the second method, which is reflected in proposed Sec.  
691.15(f)(2)(i)(B), if an institution's academic policy incorporates 
grades from coursework that it accepts on transfer into the student's 
GPA at that institution, then the grades assigned to the coursework 
accepted by the institution into the student's National SMART Grant 
eligible program would be used as the student's cumulative GPA to 
determine eligibility for the first payment period of enrollment and 
would be included in the student's cumulative GPA for all subsequent 
payment periods in accordance with the institution's academic policy.
    Reason: During negotiated rulemaking, the non-Federal negotiators 
believed the current regulations sufficiently and appropriately 
addressed the GPA calculation for a transfer student eligible for a 
National SMART Grant, but they requested that the proposed regulatory 
language clarify how an institution should calculate a GPA based on 
whether its academic policy incorporated transfer grades into the GPA 
at that institution. The proposed regulations for calculating a GPA for 
a transfer student who is eligible for a National SMART Grant would 
codify existing practice and the non-Federal negotiators were 
comfortable with taking this approach.

Prior Enrollment in a Postsecondary Educational Program and Student 
Eligibility (Sec.  691.15)

    Statute: Section 401A(c)(3)(A)(ii) of the HEA provides that, for a 
student to be eligible for a first-year ACG, the student must not have 
been previously enrolled in a program of undergraduate education.
    Current Regulations: Current Sec.  691.15(b)(1)(ii)(B) provides 
that a student is eligible for a first-year ACG if the student was not 
previously enrolled as a regular student in an ACG eligible program 
while enrolled in high school. Under the current regulations, 
therefore, a student is eligible for a first-year ACG after graduating 
from high school even if--
     While in high school, the student enrolled in an ACG 
ineligible program, e.g., a certificate program, or postsecondary 
courses without being admitted as a regular student; or
     After high school, the student was enrolled in an ACG 
eligible program as long as the student had not completed his or her 
first academic year of enrollment in the eligible program.
    Under the current regulations, a student enrolled in dual-credit or 
early college programs may be eligible for an ACG after completing 
secondary school if the student is not admitted as a regular student in 
an eligible program while in secondary school.
    Proposed Regulations: Proposed Sec.  691.15(b)(1)(ii)(C)(2) would 
amend the current regulations by extending ACG eligibility to a 
postsecondary student who previously enrolled as a regular student in 
an ACG eligible program while in high school provided that the student 
was beyond the age of compulsory school attendance during that prior 
enrollment.
    Reason: During discussions at negotiated rulemaking, the non-
Federal negotiators noted current statutory and regulatory restrictions 
on postsecondary institutions that limit an eligible institution from 
admitting most high school students as regular students. The non-
Federal negotiators considered potential problems under the current 
regulations, especially in relation to dual-credit and early college 
programs.
    We agree with the concerns raised by the non-Federal negotiators 
and believe it is important to narrow this restriction on ACG student 
eligibility resulting from a student participating in dual-credit or 
early college programs while enrolled in secondary school. Thus, we 
propose to change current Sec.  691.15(b)(1)(ii)(B) to ensure that a 
student would not be disqualified for a first-year ACG award if that 
student

[[Page 44057]]

enrolled in an ACG eligible program while in high school, so long as 
the student was above the age of compulsory school attendance at the 
time and never received Federal student aid funds while in high school. 
Because the student in this example could not qualify for any Federal 
student aid funds while enrolled in high school under section 484(a)(1) 
of the HEA, the student's enrollment would not disqualify the student 
for an ACG at a later date. This proposed change would conform with the 
institutional eligibility requirement in 34 CFR 600.4, 600.5, and 600.6 
that an institution may admit as regular students only persons who have 
a high school diploma or the equivalent, or who are beyond the age of 
compulsory school attendance.

Eligible Majors (Sec. Sec.  691.15 and 691.17)

    Statute: Section 401A(c)(3)(C)(i) of the HEA provides that a 
student may receive a National SMART Grant if the student is pursuing a 
major in the physical, life, or computer sciences; mathematics; 
technology; or engineering (as determined by the Secretary); or a 
foreign language that the Secretary, in consultation with the Director 
of National Intelligence, determines to be critical to the national 
security of the United States.

Documenting Major (Sec.  691.15)

    Current Regulations: Current Sec.  691.15(c)(2) requires that, to 
be eligible for a National SMART Grant, a student must formally declare 
his or her eligible major in accordance with the institution's academic 
requirements. However, if under an institution's procedures, a student 
would not be able to formally declare a major in time to qualify for a 
National SMART Grant, the student must demonstrate his or her intent to 
declare an eligible major as documented by the institution. Under 
current Sec.  691.15(c)(2), as soon as the student is able to formally 
declare a major, the student must do so in order to remain eligible for 
a National SMART Grant. In the case of a student who has declared or 
intends to declare an eligible major, the student must enroll in the 
courses necessary to complete the degree program and to fulfill the 
eligible major requirements.
    Proposed Regulations: Proposed Sec.  691.15(d)(1) and 691.15(e) 
would clarify how an institution must document a student's eligible 
major, and progress in the eligible program and major, by requiring the 
institution to maintain the following documentation: (a) Documentation 
of the declared major or, in the case of a student's intent to declare 
a major, a written declaration of intent provided by the student that 
has been received recently enough for the institution to determine that 
it still correctly reflects the student's stated intent; and (b) 
written documentation showing that the student is completing coursework 
at an appropriate pace in the student's declared eligible major or the 
eligible major that the student intends to declare.
    Reason: During negotiated rulemaking, the non-Federal negotiators 
sought clarification on how institutions should document a student's 
intent to declare a major to ensure appropriate compliance. 
Specifically, the non-Federal negotiators asked the Department to 
provide examples of how institutions should document a student's intent 
to declare a major. The changes reflected in proposed Sec.  
691.15(d)(1) and 691.15(e) would clarify how institutions must document 
a student's declared major or intent to declare a specific major and 
also how institutions must confirm that the student is taking the 
appropriate courses for the student's eligible program and eligible 
major. We think that these procedures are appropriate because they 
would enable the Department to monitor compliance with the statutory 
requirement that, to be eligible for a National SMART Grant, a student 
must pursue an eligible major.

Determination of Eligible Majors (Sec.  691.2(d) and Sec.  691.17)

    Current Regulations: Current Sec.  691.17(a) provides that, for 
each award year, the Secretary identifies eligible majors in the 
physical, life, or computer sciences; mathematics; technology; 
engineering; and, after consulting with the Director of National 
Intelligence, critical foreign languages.
    Proposed Regulations: Proposed Sec.  691.17(d) would provide a 
process by which institutions of higher education could request that 
additional majors be added to the Department's list of eligible majors 
for National SMART Grants. Under proposed Sec.  691.17(d), an 
institution would identify a proposed additional eligible major by its 
Classification of Instructional Programs (CIP) code developed by the 
National Center for Education Statistics. For the sake of clarity, we 
also have proposed to add to current Sec.  691.2(d) a definition of the 
term CIP as it pertains to the National SMART Grant Program.
    Reason: The non-Federal negotiators requested a mechanism by which 
institutions of higher education could ask the Department to consider 
adding majors to its list of eligible majors. We believe it is 
reasonable to incorporate a process in the proposed regulations to 
facilitate requests from institutions to add additional majors in a 
consistent manner, for the purpose of establishing a student's National 
SMART Grant eligibility.
    The CIP is a taxonomy of instructional program classifications and 
descriptions developed by the U.S. Department of Education's National 
Center for Education Statistics. For purposes of the National SMART 
Grant Program, the CIP coding scheme is currently used to identify 
eligible majors. As part of the new process, reflected in proposed 
Sec.  691.17(d), institutions would need to identify additional majors 
by referencing the name of the proposed additional major and its CIP 
code. We would continue the current process of publishing the final 
list of eligible majors for each award year on the Federal Student Aid 
Information for Financial Aid Professionals Web site.

Rigorous Secondary School Program of Study (Sec. Sec.  691.15 and 
691.16)

Successful Completion of a Rigorous Secondary School Program of Study 
(Sec.  691.15)

    Statute: Section 401A(c)(3)(A)(i) and (B)(i) of the HEA requires 
that a student must have successfully completed a rigorous secondary 
school program of study, after January 1, 2006 for first-year students 
and after January 1, 2005 for second-year students, in order to receive 
an ACG.
    Current Regulations: Under current Sec.  691.15(b)(2)(i), an 
institution must document a student's completion of a rigorous 
secondary school program of study using documentation from the 
appropriate cognizant authority provided by that authority or by the 
student.
    Proposed Regulations: Proposed Sec.  691.15(b)(1)(ii)(A) and Sec.  
691.15(b)(1)(iii)(A) would clarify that, in order to successfully 
complete a rigorous secondary school program of study, a student must, 
in addition to completing the rigorous program of study, obtain a high 
school diploma or for a home-schooled student, receive a high school 
diploma or certification of completion of a secondary school education 
provided by the student's parent or guardian. Proposed Sec.  
691.15(b)(2)(i) would clarify that an institution must document a 
student's successful completion of a rigorous secondary school program 
of study using documentation provided by the student or cognizant 
authority.
    Reason: The non-Federal negotiators requested that the regulations 
clarify the meaning of the term ``successful'' in the context of 
completing a rigorous

[[Page 44058]]

secondary school program of study. Specifically, the non-Federal 
negotiators asked that the proposed regulations clarify that to 
``successfully'' complete a rigorous secondary school program of study, 
a student must both (a) receive a high school diploma or, for a home-
schooled student, receive a high school diploma or certification of 
completion of a secondary school education provided by the student's 
parent or guardian; and (b) successfully complete a rigorous secondary 
school program of study as recognized by the Secretary under current 
Sec.  691.16. We believe that the proposed changes address the non-
Federal negotiators' concerns.
    Under proposed Sec.  691.16, in the case of a rigorous secondary 
school program of study established by a State educational agency (SEA) 
or local educational agency (LEA), the specific requirements for 
successfully completing a rigorous secondary school program of study 
would be determined by that SEA or LEA and may include, for example, a 
qualitative measure such as a minimum GPA, in addition to receiving a 
high school diploma or, for a home-schooled student, receiving a high 
school diploma or certification of completion of a secondary school 
education provided by the student's parent or guardian.
    The concept of ``success'' in relationship to completing a rigorous 
secondary school program of study for ACG purposes is also addressed in 
proposed Sec.  691.16(d), which is substantially the same as current 
Sec.  691.16(d). First, the requirement for successfully completing the 
set of courses designated by the Secretary under proposed Sec.  
691.16(d)(2) would be that a student must receive credit for those 
courses, in addition to receiving a high school diploma or, for a home-
schooled student, receiving a high school diploma or certification of 
completion of a secondary school education provided by the student's 
parent or guardian. The proposed regulations would not require that a 
student meet a minimum qualitative standard for the courses, such as 
receiving a minimum GPA, as long as the student received credit for 
those courses. Moreover, the proposed regulations would not include any 
minimum qualitative measure for successful completion of the coursework 
associated with AP or IB courses under current Sec.  691.16(d)(4) and 
(5) as long as the student completes the AP or IB coursework and 
receives a passing grade. Thus, nothing in these proposed regulations 
would change current Sec.  691.16(d)(4) and (5), under which a student 
is considered to have successfully completed a rigorous secondary 
school program of study by completing and passing the required IB or AP 
courses and scoring a 4 or higher on the corresponding IB exams or a 3 
or higher on the corresponding AP exams, and obtaining a high school 
diploma or, for a home-schooled student, a high school diploma or 
certification of completion of a secondary school education provided by 
the student's parent or guardian.

Recognition of a Rigorous Secondary School Program of Study (Sec.  
691.16)

    Statute: Section 401A(f) of the HEA requires the Secretary to 
recognize at least one rigorous secondary school program of study in 
each State for the purpose of determining student eligibility for an 
ACG. Section 401A(c)(3)(A)(i) and (B)(i) provides that a rigorous 
secondary school program of study is established by an SEA or LEA.
    Current Regulations: Current Sec.  691.16 provides that, for an 
award year, the Secretary recognizes in each State at least one 
rigorous secondary school program of study established by an LEA the 
State has authorized to establish a separate secondary school program 
of study or an SEA. The current regulations also provide for the 
Secretary to recognize additional secondary school programs of study as 
rigorous, in addition to any that may subsequently be established by 
SEAs and LEAs and recognized by the Secretary. These additional 
programs include certain advanced and honors programs established by 
States and in existence for the 2004-2005 or 2005-2006 school year.
    Proposed Regulations: Proposed Sec.  691.16(b)(2) would allow SEAs 
and LEAs to request recognition of rigorous secondary school programs 
of study for school years beyond the immediate next school year. 
Proposed Sec.  691.16(d)(1) would include a new element providing for 
the continued recognition of advanced or honors secondary school 
programs of study by the Secretary for school years subsequent to the 
2005-2006 school year.
    Reason: We believe that the proposed regulations would provide an 
efficient process for the Secretary to recognize rigorous secondary 
school programs of study for multiple years into the future. This 
process would allow SEAs and LEAs to provide students with information 
about what constitutes a rigorous secondary school program of study now 
and in future years. We believe that providing students with this 
information would have several positive outcomes. First, the 
information would provide certainty for a student that his or her 
secondary school program of study will qualify as rigorous for that 
student's State and graduation year. Second, having this information 
would allow a student to perform long-range planning of his or her 
secondary school program of study to ensure that a recognized rigorous 
secondary school program of study is completed. Third, SEAs and LEAs 
would be able to perform long-term resource allocation planning to 
ensure that the recognized rigorous secondary school program of study 
is actually available to students.

Executive Order 12866

1. Regulatory Impact Analysis

    Under Executive Order 12866, the Secretary must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Section 3(f) of Executive Order 12866 
defines a ``significant regulatory action'' as an action likely to 
result in a rule that may (1) have an annual effect on the economy of 
$100 million or more, or adversely affect a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities in a 
material way (also referred to as an ``economically significant'' 
rule); (2) create serious inconsistency or otherwise interfere with an 
action taken or planned by another agency; (3) materially alter the 
budgetary impacts of entitlement grants, user fees, or loan programs or 
the rights and obligations of recipients thereof; or (4) raise 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 proposed regulatory action would not have an 
annual effect on the economy of more than $100 million. Therefore, this 
action is not ``economically significant'' and subject to OMB review 
under section 3(f)(1) of Executive Order 12866. In accordance with the 
Executive order, the Secretary has assessed the potential costs and 
benefits of this regulatory action and has determined the benefits 
justify the costs.
Need for Federal Regulatory Action
    These proposed regulations address a range of issues affecting 
students and institutions participating in the ACG and National SMART 
Grant programs. Prior to the start of negotiated rulemaking, through a 
notice in the Federal Register and four regional

[[Page 44059]]

hearings, the Department solicited testimony and written comments from 
interested parties to identify those areas of the Title IV regulations 
that they felt needed to be revised. Areas identified during this 
process that are addressed by these proposed regulations include:
     Difficulties experienced by institutions in determining 
academic year progression. The Department has proposed changes to 
simplify determination of academic year progression, in general, and 
for transfer students, in particular. The Department also has proposed 
certain alternative methods for determining weeks of instructional 
time.
     Concerns regarding student GPA calculation at an 
institution that uses a numeric scale other than a 4.0 scale. The 
Department has proposed changes to clarify how to calculate GPA at an 
institution that assesses GPA on a numeric scale other than a 4.0 
scale.
     Confusion in both the ACG and National SMART Grant 
programs regarding GPA calculation for transfer students. The 
Department has proposed changes to clarify the GPA calculation for 
transfer students in each program.
     Concerns regarding a student's prior enrollment in a 
postsecondary educational program and student eligibility. The 
Department has proposed extending eligibility to students who enroll as 
regular students in an ACG eligible program while in high school and 
who are beyond the age of compulsory school attendance.
     Confusion regarding the documentation of a student's 
declared major or intent to declare a major, and the student's progress 
in the eligible major. The Department has proposed changes to clarify 
the documentation requirements.
     Lack of a process by which institutions of higher 
education can request additional majors to be added to the list of 
eligible majors under the National SMART Grant program. The Department 
has proposed a process by which institutions can request additional 
majors.
     Confusion regarding what constitutes successful completion 
of a rigorous secondary school program of study. The Department has 
proposed changes to clarify this requirement.
     Concerns regarding recognition of a rigorous secondary 
school program of study. The Department has proposed permitting State 
educational agencies and local educational agencies to request 
recognition of rigorous secondary school programs of study for school 
years beyond the immediate next school year.
Regulatory Alternatives Considered
    A broad range of alternatives to the proposed regulations were 
considered as part of the negotiated rulemaking process. These 
alternatives are reviewed in detail elsewhere in this preamble under 
the Reasons sections accompanying the discussion of each proposed 
regulatory provision. In assessing the budgetary impact of these 
alternatives, the Department considered the effect of possible changes 
on student eligibility for ACG and National SMART Grants or on the size 
or timing of student awards. In all cases, the alternatives considered, 
which generally dealt with the clarification of existing definitions, 
procedures, or processes to simplify program administration, did not 
have a measurable effect on Federal costs.
Benefits
    Many of the proposed regulations merely clarify the current 
regulations, codify subregulatory guidance, or make relatively minor 
changes intended to streamline program operations. In the absence of 
data to the contrary, the Department believes the additional clarity 
and enhanced efficiency resulting from the proposed changes represent 
benefits with little or no countervailing costs or additional burden. 
This belief is supported by the fact that the ACG and National SMART 
Grant committee reached tentative agreement in many areas, and, where 
it failed to reach tentative agreement, the failure generally did not 
reflect objections to the imposition of burdensome new or additional 
requirements. Nonetheless, the Department is interested in comments on 
possible administrative burdens related to the proposed regulations.
    Benefits provided in these proposed regulations include the 
elimination of the requirement that institutions determine a student's 
academic year progression based on the student's attendance in ACG or 
National SMART Grant eligible programs at all institutions, rather than 
at the institution the student currently attends; the ability for 
institutions of higher education to use three alternative approaches 
for determining weeks of instructional time in a student's academic 
year progression; and clarification of how institutions determine a 
student's GPA for the purpose of determining eligibility for an ACG or 
National SMART Grant, document a student's intent to major in an 
eligible subject, and define successful completion of a rigorous 
secondary school program of study. In addition, the proposed 
regulations would allow States to designate a rigorous secondary school 
program of study for more than one year, and create a process for 
institutions to suggest additions to the list of majors in which 
students are eligible to receive a National SMART Grant. Lastly, the 
proposed regulations would allow students beyond the age of compulsory 
education who enroll as a regular student in an ACG eligible program 
while in high school to be eligible for an ACG if they meet the other 
eligibility requirements after graduating from high school. None of 
these provisions were determined to have a substantial economic impact.
Costs
    The only provision included in the regulations that directly 
affected student eligibility and potentially could result in increased 
Federal costs involves extending eligibility to students who enroll in 
an ACG-eligible program while in high school and who are beyond the age 
of compulsory school attendance. These students, ineligible to receive 
an ACG under current regulations, would be eligible under the proposed 
regulations. The Department believes this provision will affect so few 
students that it will not result in measurable Federal costs.
    Because institutions of higher education affected by these 
regulations already participate in the ACG and National SMART Grant 
programs, these schools must have already established systems and 
procedures in place to meet program eligibility requirements. The 
proposed regulations involve discrete changes in specific parameters 
associated with existing guidance rather than entirely new 
requirements. Accordingly, entities wishing to continue to participate 
in the programs have already absorbed most of the administrative costs 
related to implementing these proposed regulations. Marginal costs over 
this baseline are primarily related to one-time system changes that, 
while possibly significant in some cases, are an unavoidable cost of 
continued program participation. The Department is particularly 
interested in comments on possible administrative burdens related to 
these proposed regulations.
    Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and 
explain burdens specifically associated with information collection 
requirements. See the heading Paperwork Reduction Act of 1995.

[[Page 44060]]

Accounting statement
    As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in Table 1 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with the provisions of these proposed 
regulations. As shown in the table, the Department estimates that these 
proposed regulations would have no impact on Federal student aid 
payments.

   Table 1.--Accounting Statement: Classification of Estimated Savings
                              [In millions]
------------------------------------------------------------------------
                          Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.............................           $0
------------------------------------------------------------------------

2. Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum on ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
     Are the requirements in the proposed regulations clearly 
stated?
     Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
     Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
     Would the proposed regulations be easier to understand if 
we divided them into more (but shorter) sections? (A ``section'' is 
preceded by the symbol ``Sec. '' and a numbered heading; for example, 
Sec.  691.16 Recognition of a Rigorous Secondary School Program of 
Study.)
     Could the description of the proposed regulations in the 
``Supplementary Information'' section of this preamble be more helpful 
in making the proposed regulations easier to understand? If so, how?
     What else could we do to make the proposed regulations 
easier to understand?
    To send any comments that concern how the Department could make 
these proposed regulations easier to understand, see the instructions 
in the ADDRESSES section of this preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities. These proposed regulations would affect institutions of 
higher education, States, State agencies, and individual students. The 
U.S. Small Business Administration (SBA) Size Standards define these 
institutions as ``small entities'' if they are for-profit or nonprofit 
institutions with total annual revenue below $5,000,000 or if they are 
institutions controlled by governmental entities with populations below 
50,000. States, State agencies, and individuals are not defined as 
``small entities'' under the Regulatory Flexibility Act.
    A significant percentage of institutions participating in the ACG 
and National SMART Grant programs meet the definition of ``small 
entities'' under the Regulatory Flexibility Act. While these 
institutions fall within the SBA size guidelines, the proposed 
regulations would not impose significant new costs on these entities.
    The Secretary invites comments from small institutions as to 
whether they believe the proposed changes would have a significant 
economic impact on them and, if so, requests evidence to support that 
belief.

Paperwork Reduction Act of 1995

    Sections 691.15 and 691.16 contain information collection 
requirements. We also address the potential for burden in proposed 
Sec.  691.17. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the Department has submitted a copy of these sections to OMB 
for its review.
    Collection of Information: Academic Competitiveness Grant (ACG) 
Program and National Science and Mathematics Access to Retain Talent 
Grant (National SMART Grant) Program, (Information Collection 1845-
0078: State Proposals for Recognition of Rigorous Secondary School 
Programs of Study).

Section 691.15--Eligibility To Receive a Grant, Prior Enrollment in a 
Postsecondary Education Program, and Student Eligibility

    The proposed regulations would extend eligibility to a student who 
may enroll as a regular student in an ACG eligible program while in 
high school if the student is beyond the age of compulsory school 
attendance. This proposed change does not represent a change in burden. 
The eligibility determination process would simply include an 
additional category of eligible students for the ACG Program.
Documenting Major
    The proposed regulations would clarify how institutions may 
document a student's declaration of an eligible major or intent to 
declare an eligible major. This documentation is needed for a student 
to qualify for a National SMART Grant. The proposed changes would not 
result in a change in burden for the institution because an institution 
is currently required to document a student's declaration of an 
eligible major or intent to declare an eligible major.
Transfer GPA--ACG
    The proposed regulations would provide clarification on how to 
calculate the GPA to determine a transfer student's second-year ACG 
eligibility as well as on the ACG requirement that GPA be calculated at 
the end of the student's first academic year. This proposed change 
would provide additional clarity about the determination of the 
transfer student's GPA from the grades of the coursework accepted by 
the current institution and therefore would not impose any additional 
institutional burden.
Transfer GPA--National SMART Grant
    The proposed regulations would specify how an institution must 
calculate a GPA for a transfer student under the National SMART Grant 
program based on whether the institution's academic policy incorporated 
transfer grades into the GPA at that institution. The proposed changes 
would not result in a change in burden for the institution because an 
institution is currently required to calculate a GPA for a transfer 
student.
Successful Completion of a Rigorous Secondary School Program of Study
    The proposed regulations would clarify that, for a student to 
successfully complete a rigorous secondary school program of study, the 
student must obtain a high school diploma, or for a home-schooled 
student, receive a high school diploma or a certification of completion 
of a secondary school education provided by the student's parent or 
guardian. The student also must successfully complete a rigorous 
secondary school program of study as identified under Sec.  691.16. The 
proposed changes would not represent a change in burden because the 
changes will only clarify the term ``successfully'' and clarify that a 
student must receive a high school diploma or, in the case of a home-
schooled student, a high school diploma or certification of completion 
provided by the student's parent or guardian.

[[Page 44061]]

Section 691.16 Recognition of a Rigorous Secondary School Program of 
Study

    The proposed regulations would allow SEAs and LEAs to request 
recognition of rigorous secondary school programs of study for school 
years beyond the immediate next school year. The proposed regulations 
also would amend the provision regarding advanced or honors secondary 
school programs of study to provide for continued recognition of these 
programs by the Secretary for school years subsequent to the 2005-2006 
school year. The proposed changes do not increase burden because there 
is an annual process for the recognition of a rigorous secondary school 
program of study currently in place. The proposed changes simply permit 
submission by the SEAs and LEAs, and recognition by the Secretary, for 
multiple years rather than a single year, and therefore do not increase 
the burden.
Determination of Eligible Majors
    While the proposed regulations in 34 CFR 691.17(d) provide a 
process by which institutions of higher education may request that 
additional majors be added to the approved list of eligible majors for 
the National SMART Grant Program, we anticipate only one or two 
requests per year, thus the anticipated additional burden is below the 
minimum threshold to be considered a burden to the affected entity--
institutions of higher education.
    If you want to comment on the proposed information collection 
requirements, please send your comments to the Office of Information 
and Regulatory Affairs, OMB, Room 10235, New Executive Office Building, 
Washington, DC, 20503; Attention: Desk Officer for U.S. Department of 
Education. Send these comments by e-mail to [email protected] or 
by fax to (202) 395-6974. Commenters need only submit comments via one 
submission method. You may also send a copy of these comments to the 
Department contact named in the ADDRESSES section of this preamble.
    We consider your comments on these proposed collections of 
information in--
     Deciding whether the proposed collections are necessary 
for the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collections, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    OMB is required to make a decision concerning the collections of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, to ensure that OMB gives your comments full consideration, 
it is important that OMB receives the comments within 30 days of 
publication. This does not affect the deadline for your comments to us 
on the proposed regulations.

Intergovernmental Review

    These programs are 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

    The Secretary particularly requests comments on whether these 
proposed regulations would 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.
    You may also view this document in PDF format at the following 
site: http://www.ifap.ed.gov.

    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 Part 691

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

    Dated: August 2, 2007.
Margaret Spellings,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary proposes 
to amend part 691 of title 34 of the Code of Federal Regulations as 
follows:

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

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

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

    2. Section 691.2(d) is amended by adding, in alphabetical order, 
the definition of ``Classification of Instructional Programs (CIP)'' to 
read as follows:


Sec.  691.2  Definitions.

* * * * *
    (d) * * *
    Classification of Instructional Programs (CIP): A taxonomy of 
instructional program classifications and descriptions developed by the 
U.S. Department of Education's National Center for Education Statistics 
used to identify eligible majors for the National SMART Grant Program. 
Further information on CIP can be found at http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2002165.
* * * * *
    3. Section 691.6 is amended by:
    A. In paragraphs (a) and (b), removing the words ``undergraduate 
education'' and adding, in their place, the words ``enrollment at an 
institution''.
    B. In paragraph (c), adding the words ``during the student's 
undergraduate education in all eligible programs'' before the 
punctuation ``.''.
    C. Revising paragraph (d).
    D. Adding new paragraphs (e), (f), (g), and (h).
    The revision and additions read as follows:


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

* * * * *
    (d)(1)(i) Institutions must count credit or clock hours earned by a 
student toward a student's completion of the

[[Page 44062]]

credit or clock hours of an academic year if the institution accepts 
those hours toward the student's eligible program, including credit or 
clock hours that are earned--
    (A) From Advanced Placement (AP) programs, International 
Baccalaureate (IB) programs, testing out, life experience, or similar 
competency measures; or
    (B) At an institution while not enrolled as a regular student in an 
eligible program.
    (ii) Institutions may not count credit or clock hours awarded for 
coursework that is at less than the postsecondary level, such as 
remedial coursework. These credit or clock hours may not be considered 
in determining the credit or clock hours that a student has completed 
in an academic year.
    (2)(i) An institution may not assign any weeks of instructional 
time to credit or clock hours accepted toward meeting the student's 
eligible program if the student earned the credit or clock hours--
    (A) From Advanced Placement (AP) programs, International 
Baccalaureate (IB) programs, testing out, life experience, or similar 
competency measures;
    (B) At a postsecondary institution while not enrolled as a regular 
student in an eligible program except as provided in paragraph 
(d)(2)(ii) of this section; or
    (C) For coursework that is not at the postsecondary level, such as 
remedial coursework.
    (ii) An institution must assign weeks of instructional time to 
determining National SMART Grant eligibility for periods in which a 
student was enrolled in an ACG eligible program prior to declaring, or 
certifying his or her intent to declare, an eligible major.
    (3) For a transfer student, an institution determining the academic 
years completed by the student must count--
    (i) The number of credit or clock hours earned by the student at 
prior institutions that comply with paragraph (d)(1) of this section, 
and that the institution accepts on transfer into the student's 
eligible program; and
    (ii) The weeks of instructional time, except as prohibited in 
paragraph (d)(2) of this section, determined by multiplying the number 
of credit or clock hours that the institution accepts on transfer by 
the number of weeks of instructional time in the academic year and 
dividing the product of the multiplication by the credit or clock hours 
in the academic year.
    (e)(1) Except as provided in paragraph (e)(2) of this section, an 
institution must determine a student's progression in the weeks of 
instructional time of an academic year through an exact accounting of 
those weeks of instructional time.
    (2) An institution may use, on an eligible program-by-program 
basis, an alternative method to determine the weeks of instructional 
time taken by its students during an academic year under paragraphs 
(f), (g), and (h) of this section if the institution--
    (i) Determines payments for the student's eligible program under 
Sec.  691.63(b) or (c);
    (ii) Uses, for all students enrolled in the eligible program, the 
same alternative method described in paragraph (f), (g), or (h) of this 
section to determine the students' progression in the weeks of 
instructional time of an academic year; and
    (iii) Upon request from a student, performs an exact accounting of 
the student's academic year progression for that student based on the 
actual weeks of instructional time the student attended in all eligible 
programs at the institution and on any qualifying credit or clock hours 
accepted on transfer into the student's eligible program.
    (3) An institution may not use an alternative method under 
paragraphs (f), (g), or (h) of this section if it performs an exact 
accounting for a student, including an accounting pursuant to paragraph 
(e)(2)(ii) of this section. Once an institution initiates an exact 
accounting for a student under this section, the institution must use 
the determination for that student based on the exact accounting and 
not the determination based on an alternative method.
    (f)(1) For an eligible program for which the institution may 
determine payments under Sec.  691.63(b) or (c), an institution may 
determine a student's completion of the weeks of instructional time in 
an academic year under the procedures set forth in paragraphs (f)(2) 
and (f)(3) of this section.
    (2) For an eligible student enrolled in an eligible program that 
has a single summer term that provides at least 12 semester, trimester, 
or quarter hours of coursework and for which payments are calculated 
under Sec.  691.63(b), the student's term is considered to be--
    (i) For an eligible program offered in semesters or trimesters, 
one-half of an academic year in weeks of instructional time if payments 
may be determined under Sec.  691.63(b)(3)(i), or one-third of an 
academic year in weeks of instructional time if payments may be 
determined under Sec.  691.63(b)(3)(ii); or
    (ii) For an eligible program offered in quarters that has a single 
summer term, one-third of an academic year in weeks of instructional 
time if payments may be determined under Sec.  691.63(b)(3)(i), or one-
fourth of an academic year in weeks of instructional time if payments 
may be determined under Sec.  691.63(b)(3)(ii).
    (3) For an eligible student enrolled in an eligible program with a 
single summer term that provides at least 12 semester, trimester, or 
quarter hours of coursework for which the institution may determine 
payments under Sec.  691.63(c), the student's term is considered to 
be--
    (i) For an eligible program offered in semesters or trimesters, 
one-half of the weeks of instructional time in the fall through spring 
terms if payments may be determined under Sec.  691.63(c)(4)(i), or 
one-third of an academic year in weeks of instructional time if 
payments may be determined under Sec.  691.63(c)(4)(ii); or
    (ii) For an eligible program offered in quarters, one-third of the 
weeks of instructional time in the fall through spring terms if 
payments may be determined under Sec.  691.63(c)(4)(i), or one-fourth 
of an academic year in weeks of instructional time if payments may be 
determined under Sec.  691.63(c)(4)(ii).
    (g)(1) Except as provided in paragraph (d)(2) of this section, an 
institution with an eligible program for which the institution may 
determine payments under Sec.  691.63(b) or 691.63(c) may determine a 
student's completion of the weeks of instructional time in an academic 
year under the procedures set forth in paragraph (g)(2) or (g)(3) of 
this section.
    (2) For an eligible student enrolled in an eligible program for 
which payments may be determined under Sec.  691.63(b), an institution 
must determine the number of weeks a student is considered to have 
completed in an academic year by multiplying the number of credit hours 
a student has earned in an eligible program by the number of weeks of 
instructional time in the academic year and dividing the product of the 
multiplication by the credit or clock hours in the academic year.
    (3) For an eligible student enrolled in an eligible program for 
which payments may be determined under Sec.  691.63(c), an institution 
must determine the number of weeks a student is considered to have 
completed in an academic year by multiplying the number of credit hours 
a student has earned in an eligible program by the number of weeks of 
instructional time in the fall through spring terms and dividing the 
product of the multiplication by the credit or clock hours in the 
academic year.

[[Page 44063]]

    (h)(1) Except as provided in paragraph (d)(2) of this section, a 
student at a grade level can be assumed to have completed an academic 
year for each of the prior grade levels if for each grade level of a 
student's eligible program--
    (i) A student has completed at least the minimum credit hours for 
the prior academic years for that program in accordance with this 
section; and
    (ii) Most full-time students in the student's eligible program 
complete the weeks of instructional time of an academic year during the 
period of completing each grade level as determined in accordance with 
paragraph (h)(2) of this section.
    (2)(i) For purposes of an award year, in making a determination 
under paragraph (h)(1)(ii) of this section, an institution must first 
determine that at least two-thirds of the full-time, full-year students 
complete at least the weeks of instructional time of an academic year 
while completing each grade level during the three most recently 
completed award years prior to the award year immediately preceding the 
award year for which the determination is made.
    (ii) For each of the ACG or National SMART Grant programs, an 
institution may make a determination under paragraph (h)(2)(i) of this 
section on an eligible program basis or an institutional basis.
* * * * *
    4. Section 691.15 is amended by:
    A. Revising paragraphs (b), (c), and (d).
    B. Adding new paragraphs (e), (f), and (g).
    The revisions and additions read as follows:


Sec.  691.15  Eligibility to receive a grant.

* * * * *
    (b) ACG Program. (1) A student is eligible to receive an ACG if the 
student--
    (i) Meets the eligibility requirements in paragraph (a) of this 
section;
    (ii) For the first academic year of his or her eligible program--
    (A) Has received a high school diploma or, for a home-schooled 
student, a high school diploma or the certification of completion of a 
secondary school education by the cognizant authority;
    (B) Has successfully completed after January 1, 2006, as determined 
by the institution, a rigorous secondary school program of study 
recognized by the Secretary under Sec.  691.16; and
    (C) Has not previously been enrolled as a regular student in an 
eligible program while--
    (1) Enrolled in high school; and
    (2) Being at or below the age of compulsory school attendance; and
    (iii) For the second academic year of his or her eligible program--
    (A) Has received a high school diploma or, for a home-schooled 
student, a high school diploma or the certification of completion of a 
secondary school education by the cognizant authority;
    (B) Has successfully completed, after January 1, 2005, as 
determined by the institution, a rigorous secondary school program of 
study recognized by the Secretary under Sec.  691.16;
    (C) Has successfully completed the first academic year of his or 
her eligible program; and
    (D) For the first academic year of his or her eligible program, 
obtained a grade point average (GPA) of 3.0 or higher on a 4.0 scale, 
or the numeric equivalent, consistent with other institutional measures 
for academic and title IV, HEA program purposes.
    (2)(i) An institution must document a student's successful 
completion of a rigorous secondary school program of study under 
paragraphs (b)(1)(ii)(A), (b)(1)(ii)(B), (b)(1)(iii)(A) and 
(b)(1)(iii)(B) of this section using--
    (A) Documentation provided directly to the institution by the 
cognizant authority; or
    (B) Documentation from the cognizant authority provided by the 
student.
    (ii) If an institution has reason to believe that the documentation 
provided by the student under paragraph (b)(2)(i)(B) of this section is 
inaccurate or incomplete, the institution must confirm the student's 
successful completion of a rigorous secondary school program of study 
by using documentation provided directly to the institution by the 
cognizant authority.
    (3) For purposes of paragraph (b) of this section--
    (i) A cognizant authority includes, but is not limited to--
    (A) An LEA;
    (B) An SEA or other State agency;
    (C) A public or private high school; or
    (D) A testing organization such as the College Board or State 
agency; or
    (ii) A home-schooled student's parent or guardian is the cognizant 
authority for purposes of providing the documentation required under 
paragraph (b) of this section. This documentation must show that the 
home-schooled student successfully completed a rigorous secondary 
school program under Sec.  691.16(d)(2). This documentation may include 
a transcript or the equivalent or a detailed course description listing 
the secondary school courses completed by the student.
    (4) For a student who transfers from an eligible program at one 
institution to an eligible program at another institution, the 
institution to which the student transfers may rely upon the prior 
institution's determination that the student successfully completed a 
rigorous secondary school program of study in accordance with 
paragraphs (b)(1)(ii)(A), (b)(1)(ii)(B), (b)(1)(iii)(A), and 
(b)(1)(iii)(B) of this section based on documentation that the prior 
institution may provide, or based on documentation of the receipt of an 
ACG disbursement at the prior institution.
    (c) National SMART Grant Program. A student is eligible to receive 
a National SMART Grant for the third or fourth academic year of his or 
her eligible program if the student--
    (1) Meets the eligibility requirements in paragraph (a) of this 
section;
    (2)(i)(A) In accordance with the institution's academic 
requirements, formally declares an eligible major; or
    (B) Is at an institution where the academic requirements do not 
allow a student to declare an eligible major in time to qualify for a 
National SMART Grant on that basis and the student demonstrates his or 
her intent to declare an eligible major in accordance with paragraph 
(d) of this section; and
    (ii) Enrolls in the courses necessary both to complete the degree 
program and to fulfill the requirements of the eligible major as 
determined and documented by the institution in accordance with 
paragraph (e) of this section;
    (3) Has a cumulative GPA through the most recently completed 
payment period of 3.0 or higher on a 4.0 scale, or the numeric 
equivalent measure, consistent with other institutional measures for 
academic and title IV, HEA program purposes, in the student's eligible 
program;
    (4) For the third academic year, has successfully completed the 
second academic year of his or her eligible program; and
    (5) For the fourth academic year, has successfully completed the 
third academic year of his or her eligible program.
    (d) Intent to declare a major. (1) For a student whose 
institution's academic policies do not allow the student to declare an 
eligible major in time to qualify for a National SMART Grant 
disbursement, the institution must obtain and keep on file a recent 
self-certification of intent to declare an eligible major that is 
signed by the student.
    (2) The student described in paragraph (d)(1) of this section must 
formally declare an eligible major when he or she is able to do so 
under the institution's academic requirements.

[[Page 44064]]

    (e) Documentation of progression in the major. The institution must 
document a student's progress in taking the courses necessary to 
complete the intended or declared major that establishes eligibility 
for a National SMART Grant. Documentation of coursework progression in 
the eligible program and major under paragraph(c)(2)(ii) of this 
section may include, but is not limited to:
    (1) Written counselor or advisor tracking of coursework progress 
toward a degree in the intended or declared eligible major at least 
annually.
    (2) Written confirmation from an academic department within the 
institution that the student is progressing in coursework leading to a 
degree in the intended or declared eligible major. This confirmation 
must be signed by a departmental representative for the intended 
eligible major at least annually.
    (3) Other written documentation of coursework that satisfies the 
ongoing nature of monitoring student coursework progression in the 
intended or declared eligible major at least annually.
    (f) Transfer students. (1)(i) Under the ACG Program, if a student 
transfers to an institution that accepts for enrollment at least the 
credit or clock hours for one academic year but less than the credit or 
clock hours for two academic years from all prior postsecondary 
institutions attended by the student, the GPA to determine second-year 
eligibility for an ACG is calculated using the grades from all 
coursework accepted by the current institution into the student's 
eligible program.
    (ii) Under the ACG Program, if a student transfers to an 
institution that accepts for enrollment less than the credit or clock 
hours for one academic year from all prior postsecondary institutions 
attended by the student, the GPA to determine second-year eligibility 
for an ACG is calculated using the grades from--
    (A) All coursework accepted from all prior postsecondary 
institutions by the current institution into the student's eligible 
program; and
    (B) The coursework earned at the current institution through the 
payment period in which the student completes the credit or clock hours 
of the student's first academic year in an eligible program based on 
the total of the credit or clock hours accepted on transfer and the 
credit or clock hours earned at the current institution.
    (2)(i) Under the National SMART Grant Program, if a student 
transfers from one institution to the current institution, the current 
institution must determine that student's eligibility for a National 
SMART Grant for the first payment period using either the method 
described in paragraph (f)(2)(i)(A) of this section or the method 
described in paragraph (f)(2)(i)(B) of this section, whichever method 
coincides with the current institution's academic policy. For an 
eligible student who transfers to an institution that--
    (A) Does not incorporate grades from coursework that it accepts on 
transfer into the student's GPA at the current institution, the current 
institution, for the courses accepted in the eligible program upon 
transfer--
    (1) Must calculate the student's GPA for the first payment period 
of enrollment using the grades earned by the student in the coursework 
from any prior postsecondary institution that it accepts toward the 
student's eligible program; and
    (2) Must, for all subsequent payment periods, apply its academic 
policy and not incorporate the grades from the coursework that it 
accepts on transfer into the GPA at the current institution; or
    (B) Incorporates grades from the coursework that it accepts on 
transfer into the student's GPA at the current institution, an 
institution must use the grades assigned to the coursework accepted by 
the current institution into the eligible program as the student's 
cumulative GPA to determine eligibility for the first payment period of 
enrollment and all subsequent payment periods in accordance with its 
academic policy.
    (ii) If the institution accepts no credit or clock hours toward the 
student's eligible program, the institution must consider the student 
to be ineligible until the student completes at least one payment 
period in an eligible program with a qualifying GPA.
    (g) Numeric equivalent. (1) If an otherwise eligible program 
measures academic performance using an alternative to standard numeric 
grading procedures, the institution must develop and apply an 
equivalency policy with a numeric scale for purposes of establishing 
ACG or National SMART Grant eligibility. That institution's equivalency 
policy must be in writing and available to students upon request and 
must include clear differentiations of student performance to support a 
determination that a student has performed at a level commensurate with 
at least a 3.0 GPA on a 4.0 scale in that program.
    (2) A grading policy that includes only ``satisfactory/
unsatisfactory'', ``pass/fail'', or other similar nonnumeric 
assessments qualifies as a numeric equivalent only if--
    (i) The institution demonstrates that the ``pass'' or 
``satisfactory'' standard has the numeric equivalent of at least a 3.0 
GPA on a 4.0 scale awarded in that program, or that a student's 
performance for tests and assignments yielded a numeric equivalent of a 
3.0 GPA on a 4.0 scale; and
    (ii) The institution's equivalency policy is consistent with any 
other standards the institution may have developed for academic and 
other title IV, HEA program purposes, such as graduate school 
applications, scholarship eligibility, and insurance certifications, to 
the extent such standards distinguish among various levels of a 
student's academic performance.
* * * * *
    5. Section 691.16 is amended by:
    A. Revising paragraph (b).
    B. In the introductory text of paragraph (c), removing the word 
``identifying'' and adding, in its place, the word ``establishing''.
    C. In paragraph (c)(2), removing the word ``successfully'' before 
the punctuation ``;'' and adding the word ``successfully'' immediately 
before the word ``pursue''.
    D. In the introductory text of paragraph (d), removing the word 
``identified'' and adding, in its place, the word ``established''.
    E. In paragraph (d)(1), removing the words ``or 2005-2006 school 
year'' and adding, in their place, the words ``school year or later 
school years''.
    F. In the introductory text of paragraph (d)(2) adding the word 
``successfully'' immediately after the word ``student''.
    The revision reads as follows:


Sec.  691.16  Recognition of a rigorous secondary school program of 
study.

* * * * *
    (b) For each award year, the Secretary establishes a deadline for 
SEAs and LEAs to submit information about the secondary school program 
or programs that the SEA or LEA establishes as a rigorous secondary 
school program of study, and, in the case of an LEA, documentation that 
the LEA is legally authorized by the State to establish a separate 
secondary school program of study. An SEA and LEA, if applicable, may 
submit information--
    (1) For students graduating during the current school year; and
    (2) For students graduating during one or more specified upcoming 
school years.
* * * * *

[[Page 44065]]

    6. Section 691.17 is amended by redesignating paragraph (c) as 
paragraph (e), and adding new paragraphs (c) and (d) to read as 
follows:


Sec.  691.17  Determination of eligible majors.

* * * * *
    (c) Designation of eligible majors. For each award year, the 
Secretary publishes a list of eligible majors identified by CIP code.
    (d) Designation of an additional eligible major. For each award 
year, the Secretary establishes a deadline for an institution to 
request designation of an additional eligible major.
    (1) Requests for designation of an additional eligible major must 
include--
    (i) The CIP code and program title of the additional major;
    (ii) The reason or reasons the institution believes the additional 
major should be considered an eligible program under this part; and
    (iii) Documentation showing that the institution has actually 
awarded or plans to award a bachelor's degree in the requested major.
    (2) For each award year, the Secretary will confirm the final list 
of eligible majors.
* * * * *


Sec.  691.75  [Amended]

    7. Section 691.75 is amended by:
    A. In paragraph (b)(2), removing the regulatory citation 
``691.15(b)(1)(iii)(C)'' and adding, in its place, the regulatory 
citation ``691.15(b)(1)(iii)(D)''.
    B. In paragraph (c), removing the regulatory citation 
``691.15(b)(1)(iii)(C)'' and adding, in its place, the regulatory 
citation ``691.15(b)(1)(iii)(D)''.
    C. In paragraph (d)(1)(i), removing the regulatory citation 
``691.15(b)(1)(iii)(C)'' and adding, in its place, the regulatory 
citation ``691.15(b)(1)(iii)(D)''.

 [FR Doc. E7-15306 Filed 8-6-07; 8:45 am]
BILLING CODE 4000-01-P