An Uncertain Future for ACG/SMART Grants

In 2006, President Bush signed two new higher education grant programs into law: the Academic Competitiveness (ACG) and Science and Mathematics Access to Retain Talent (SMART) grant programs. Both have received mixed reviews from the higher education community, and recent reports from the Department of Education have shed new light on the programs' fledgling operations. This information will certainly affect Congress and the president's decision to extend the programs which are set to expire after fiscal year 2010. The Obama Administration's full fiscal year 2010 budget, expected to be released as early as this week, might give the first clue as to what the new Administration plans to propose for the grant programs. In the meantime, let's take a brief look at what we know about the programs.

Pell Grant-eligible students who meet additional requirements qualify for both ACG and SMART grants. The ACG program is available to first and second year postsecondary students who have completed a "rigorous" high school curriculum and have a cumulative grade point average of 3.0 in their first year of college. First-year recipients can get up to $750 and second-year recipients up to $1,300. SMART grants are available for third- and fourth- year students who major in mathematics, science, or engineering or certain foreign languages. The program also requires a cumulative 3.0 grade point average in coursework required for the major. The maximum grant is $4,000 per year.

Earlier this year, both the U.S. Department of Education and the Government Accountability Office (GAO) released reports on the ACG/SMART grant programs. The reports find that only a quarter of first and second-year Pell Grant recipients receive ACGs, and many second-year students are unable to meet the grade point average requirement. Both reports draw a connection between the variation in state and local high school curricula and student eligibility with respect to the "rigorous curriculum" requirement for ACGs. Specifically, they state that the variation helps explain higher participation rates in some states, such as Massachusetts and Pennsylvania, than in others. Similarly, college financial aid administrators have had difficulty verifying whether students have met the "rigorous curriculum" requirement due to curricula variation and the numerous ways in which students can satisfy the requirements.

According to the reports, SMART grant participation rates are even lower than those for ACGs -- about five percent of third and fourth-year Pell Grant recipients. Life sciences and engineering are the most popular majors that grant recipients pursue. Interestingly, one-third of all SMART grants awarded to computer science majors went to students enrolled in for-profit institutions of higher education.

Federal funding for the two grant programs has far exceeded student demand and eligibility. This is partly due to incorrect estimates of the number of students who would participate in the program and partly due to an unusual budgeting move by Congress. In 2006, when the programs were created, Congress funded the grants in advance and specified available funding for each of the fiscal years through 2010 based on estimates of student participation. In contrast, most federal education programs are funded on a year-to-year basis through the appropriations process. What is more, few programs operate with predetermined per-student award levels like ACG/SMART grants, which requires that Congress fund the program in advance based on estimated participation to ensure all eligible applicants receive grants.

To address the funding surpluses that accumulated in the program, Congress has made funding changes to ACG/SMART grants in annual appropriations legislation. The fiscal year 2009 omnibus appropriations bill signed into law in March reduced funding for the program from $960 to $73 million for that fiscal year, deferring the original 2009 funds to 2010. The 2008 appropriations bill permanently cancelled $525 million of the $920 million originally provided for that fiscal year. Those funds were shifted into the Pell Grant program. Congress may make a similar move in the upcoming 2010 appropriations bill because the $1.9 billion now available for ACG/SMART grants will likely be more than enough to award grants to all qualified applicants.

Although Congress has changed both programs' eligibility requirements to increase ACG/SMART participation through 2010, the programs' long term futures are uncertain. Both programs may not have won enough support among students, institutions of higher education, and policymakers to ensure their extension into fiscal year 2011 and beyond. Look for the Obama Administration's que on this issue in the fiscal year 2010 budget release.