Federal Updates

ED provides additional guidance on new grant programs

Amidst the sweeping changes brought by the Higher Education Reconciliation Act of 2005 (HERA), many policy discussions have focused on changes to the FFELP. However, TG is aware that our school partners have been eagerly awaiting further guidance on the new Academic Competitiveness Grant (which ED is calling the AC Grant) and National SMART Grant, and additional guidance has recently been released. Last week, ED released two Dear Colleague Letters (DCLs), GEN-06-06 and GEN-06-08, with further information about the implementation and administration of these grants (see Shoptalk Online Edition 351 for an overview of these new programs).

List of eligible majors for National SMART Grant Program
The SMART Grant will provide $4,000 per academic year for third- and fourth-year students who meet certain need-based and academic criteria; one of the requirements to receive the grant is enrollment in a qualifying major. GEN-06-06 provides a complete list of academic majors in which a student can be enrolled in order to be eligible for the National SMART Grant Program and their associated NCES CIP (National Center for Education Statistics Classification of Instructional Programs) codes. The list includes the physical and life sciences (health sciences are specifically excluded), computer science, engineering, math, technology, certain foreign languages, and several multidisciplinary studies majors.

In an expansion of the previous guidance from ED, GEN-06-06 also states that "These fields of study qualify as eligible majors for the National SMART Grant Program to the extent a student is enrolled in a bachelor's degree or a graduate degree program that includes at least three academic years of undergraduate education." This guidance applies to mixed-degree programs, an example of which is described in the 2006-07 Federal Student Aid Handbook (FSA Handbook), page AVG-11, as a degree program in which "a student might earn a bachelor's degree and a master's degree in five years of coursework." The FSA Handbook further states that "The school determines at what point after three years' worth of full-time study the student ceases to be an undergraduate and becomes a graduate student, which of course affects his dependency status and loan limits, among other things. This determination must be consistent for all students in a program." Thus, since one of the qualifiers for a SMART Grant is Pell grant eligibility, and Pell grant eligibility is limited to undergraduate students and students seeking teacher certification, an otherwise eligible student in a mixed-degree program would be eligible for the SMART Grant through the point in time in which the school determined that the student ceased to be an undergraduate and became a graduate student.

"Rigorous" program of study defined
GEN-06-08 provides further guidance on the implementation of the two new grant programs, as well as definitions of what ED deems a rigorous high school program for AC Grant recipients, while emphasizing that "states will also maintain the flexibility to submit a proposal for what they recognize as rigorous." The DCL identifies the following programs as automatically meeting the definition of rigorous for the 2006-07 award year:

• Advanced or honors diplomas currently offered by states (such as the Distinguished Achievement Diploma in Texas);
• State Scholars Initiative program that is currently offered in 14 states;
• Set of course requirements that is similar to the State Scholars requirements (these requirements are detailed in the letter); and
• Minimum of either at least two Advanced Placement courses with a score of 3 or higher, or at least two International Baccalaureate courses with a score of 4 or higher.

ED believes that these criteria will enable students from states without a designated advanced or honors program — as well as non-traditional high school students (for example, home-schooled students, private school students, and students attending an overseas Department of Defense high school) — to qualify as having completed a rigorous program of study.

Additional information in GEN-06-08
ED estimates that less than 40 percent of Pell grant-eligible students (roughly 500,000) will be eligible for the AC or SMART Grant. ED is preparing to publish final regulations on the two grant programs as well as a notice of waiver of negotiated rulemaking to be in effect for the next two years; however, ED expects negotiated rulemaking to occur for subsequent years.

GEN-06-08 explains how a state may submit a proposal to have a program of study — beyond the four options listed above — recognized as rigorous. Such proposals must be submitted to ED by June 1, 2006.

Finally, GEN-06-08 appears to resolve unclear guidance previously received from ED (in GEN-06-04) on the treatment of the AC Grant and SMART Grant in packaging a student's financial aid; namely, whether the grants should be treated as need-based aid or non-need-based aid in determining a student's remaining financial need. GEN-06-08 states, "Note that the amount of the AC Grant or SMART Grant, when combined with a Pell Grant, may not exceed the student's cost of attendance," which is in agreement with the statutory language.

Timeline on ED's Web site
ED has published a timeline of upcoming important dates through January 2007 on its Web site at www.ed.gov/about/inits/ed/competitiveness/ac-smart.html:

• Late June 2006: States, colleges, and students will receive notice of programs that have been recognized as rigorous for grant purposes by the Secretary of Education for the 2006-07 academic year.
• July 1, 2006: Potentially-eligible students will be notified via e-mail and regular mail that they should submit additional information to ED to determine AC Grant eligibility.
• Fall 2006: Institutions of higher education will verify student eligibility using records of high school performance. Student aid will be disbursed.
• Nov. 1, 2006: Deadline for States to establish and submit to ED additional rigorous secondary school programs of study for recognition in the 2007-08 academic year.
• January 2007: States receive notice of rigorous secondary school programs of study that have been recognized by ED for the 2007-08 academic year.

More information
The American Association of Collegiate Registrars and Admissions Officers (AACRAO) will be hosting a webinar on the AC Grant and SMART Grant Programs on Thursday, May 11, 2006, from 2 p.m. to 3:30 p.m. (EST). The webinar will be presented by Kay Jacks, ED's FSA General Manager for Application, School Eligibility and Delivery Services, and Susan O'Flaherty, Deputy Director, FSA Application Processing. The webinar is being provided free of charge as a service to the higher education community. Interested parties may register for the webinar online at http://webinar.aacrao.org/competitiveness/reg.htm.

GEN-06-06 is available at http://ifap.ed.gov/dpcletters/GEN0606.html; GEN-06-08 is available at http://ifap.ed.gov/dpcletters/GEN0608.html. To learn more about the AC Grant and SMART Grant Programs, call TG customer assistance at (800) 845-6267 or send an e-mail message to cust.assist@tgslc.org.

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New FFELP deferment forms approved

Yesterday, ED released Dear Colleague Letter (DCL) FP-06-06, which announced the approval of revised deferment forms and provided guidance on the transition of use of the new forms.

The revised deferment forms include:

• Unemployment Deferment Request (UNEM)
• Public Service Deferment Request (PUB)
• Parental Leave/Working Mother Deferment Request (PLWM)
• PLUS Borrower with Dependent Student Deferment Request (PLUS)
• In-School Deferment Request (SCH)
• Economic Hardship Deferment Request (HRD)
• Education Related Deferment Request (EDU)
• Temporary Total Disability Deferment Request (TDIS)

Lenders and servicers may begin to use the new forms immediately, but must provide only the newly approved forms to borrowers beginning September 25, 2006. However, if a lender or servicer receives a previous version of one of these revised deferment forms after that date, the lender or servicer may process the form.

PDF versions of the new forms are available as attachments in the DCL and on TG Online at www.tgslc.org/forms/frms_def.cfm.

More information
To access FP-06-06, visit http://ifap.ed.gov/dpcletters/FP0606.html. For questions about deferments, contact TG customer assistance at (800) 845-6267 or send an e-mail message to cust.assist@tgslc.org.

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ED releases high-level overview of operational changes due to HERA

On May 5, ED released an Electronic Announcement providing information about ED's plans to "operationally implement the HERA changes that will affect the CPS, COD System, and EDExpress Suite." This announcement is the first in a series of communications; subsequent communications will provide more detailed information.

The announcement provides an overview of the operational changes that ED will implement and the key dates associated with these changes, as they pertain to the following:

• Need analysis changes — Expected Family Contribution (EFC) calculation
• Active duty military members as independent students
• Drug-related offenses
• Return of Title IV funds (R2T4) on the Web
• Academic Competitiveness Grant (ACG) and National SMART Grant
• Single loan disbursement/30-day delay exemptions for low cohort default rate schools

Of particular note
One highly anticipated bit of information included in the Electronic Announcement pertains to the reprocessing of FAFSAs for certain data elements for certain students, as a result of HERA-related changes. Specifically, the announcement states that "for the 2006-07 award year, the CPS will reprocess certain Free Application for Federal Student Aid (FAFSA) data to accommodate some of the need analysis changes in the HERA. These changes include eliminating the consideration of a dependent student's type of tax return for the simplified needs test (SNT) and automatic zero EFC, and increasing the income threshold to $20,000 to qualify for an automatic zero EFC. In a separate communication, we will describe how we will handle remaining need analysis changes for the 2006-07 award year that will not be handled through reprocessing."

More information
To view the Electronic Announcement, visit http://ifap.ed.gov/eannouncements/0505HERAOperationalImplGuide.html. For questions about this Electronic Announcement, contact TG customer assistance at (800) 845-6267 or send an e-mail message to cust.assist@tgslc.org.

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ED extends prior guidance relating to Gulf Coast hurricanes

On April 28, ED issued Dear Colleague Letter (DCL) GEN-06-07 which summarized and provided for an extension of prior guidance related to hurricanes Katrina and Rita.

In the aftermath of the devastation caused by the Gulf Coast hurricanes in 2005, the Higher Education Hurricane Relief Act of 2005 authorized the Secretary of Education to waive certain provisions under the Higher Education Act (HEA) in connection with a Gulf hurricane disaster. GEN-06-07 addresses guidance provided by ED since September 2005, and provides for extensions of certain waivers relating to student financial assistance and institutional eligibility.

Topics addressed in the DCL include:

• Need analysis
• 30-day delay in disbursing student loans
• Multiple and equal disbursements
• Campus-based aid
• Institutional eligibility and participation waivers
• Return of Title IV funds
• Late disbursements
• Collection of defaulted loans
• Loan forbearance
• Interruptions
• Documentation requirements for loan holders
• Professional judgment
• Verification
• Satisfactory academic progress
• Length of academic year
• Lost records
• Reporting

More information
To access GEN-06-07, visit http://ifap.ed.gov/dpcletters/GEN0607.html.

For more information about ED guidance related to the Gulf Coast hurricanes, contact TG customer assistance at (800) 845-6267 or send an e-mail message to cust.assist@tgslc.org.

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