THE SECRETARY OF EDUCATION

WASHINGTON, D.C. 20202

May 2, 2006

Dear Colleague:

The purpose of this letter is to describe how the U.S. Department of Education intends to
implement a new student grant program. Please note that action described in this letter
may be required by June 1 for college students from your State to receive a new type of
federal student financial aid.

A growing national consensus is emerging on the need for high school reform, and the need to
refocus on math and science education. Leaders from the business, political, and educational
communities are in agreement on the importance of improving our national performance. Recent
studies and test scores support this view.

One common denominator has been the call for more academic rigor in the classroom – more
demanding subjects, more years of study, and greater access to college preparatory courses.
President George W. Bush has said that “…we need to encourage children to take more math and
science, and to make sure those courses are rigorous enough to compete with other nations.” At
the 2005 National Education Summit on High Schools, the nation’s governors agreed that “To
ensure that all high school graduates are prepared for postsecondary education and work,
governors and business and education leaders must develop a comprehensive plan for their states
to … [r]estore value to the high school diploma….” However, in a recent study, Achieve, Inc.
reported that only eight States in the nation “have enacted college- and work-ready graduation
requirements.”

Recent statistics display how much room for improvement we have in this arena:

o Eight developed nations have surpassed America’s high school graduation rate among
young adults;
o Nearly a third of all students – and about half of African American and Hispanic students
– do not graduate from high school on time;
o Of the students who do graduate, less than half are ready for college-level math and
science coursework;
o Almost 30% of incoming college freshmen require remediation in reading, writing, or
math; and
o In 1970, the U.S. produced over 50% of the world’s science and engineering doctorates;
by 2010, our share is projected to be about 15%.

The solution to this situation demands systemic action on the part of educational leaders and
citizens to improve our high schools, provide opportunities for students that will better prepare

400 MARYLAND AVENUE, S.W., WASHINGTON, D.C., 20202

www.ed.gov
them for college, and place a greater emphasis on math and science education. Congress has
responded to this need. On February 8, 2006, the President signed into law the Deficit Reduction
Act of 2005 (Pub. L. 109-171). Included as a subtitle within the Act is the “Higher Education
Reconciliation Act of 2005 (HERA).” HERA contains a new student grant program, the
Academic Competitiveness Grant Program. The program includes two types of grants for certain
Pell Grant-eligible college students: the Academic Competitiveness Grant (AC grant) and the
National Science and Mathematics Access to Retain Talent Grant (SMART grant).

This grant program makes available $790 million in the 2006-07 academic year and $4.5 billion
over five years to provide aid to low-income college students who meet general Pell Grant
program guidelines, as well as additional specified criteria. AC Grants will be awarded to first-
and second-year college students who have successfully completed a rigorous secondary school
program, while SMART grants will be awarded to third- and fourth-year college students who
major in mathematics, science, technology, engineering, or critical foreign languages. (See
Attachment for additional program details.)

As these funds are available beginning in July for students enrolling in college for the 2006-07
academic year, it is important that quick action be taken to set up the means for distributing these
funds. This letter aims to get the process moving on this grant program and to explain how the
Department will deliver these critical funds to eligible students in the near term. I also outline
the steps the Department envisions taking over the next several years to use these grants to
encourage and support States as they make high school a more rigorous, challenging, and
relevant experience for all students. As part of this process, and because there is a need to
implement these programs in time to make awards at the beginning of the 2006-2007 academic
year, we are preparing to publish final regulations, with a waiver of notice-and-comment
rulemaking and negotiated rulemaking, that will specify how we will implement this program for
at least the next two academic years. For the years thereafter, we intend to promulgate
regulations to establish the details of the program’s implementation. This rulemaking will be
conducted in a manner consistent with the requirements of the Higher Education Act of 1965, as
amended (HEA), and the Administrative Procedure Act (APA).

I recognize that implementing these new programs this year will place significant burdens on
colleges and universities. I believe that financial aid officers and other campus officials will
make every effort to implement these new programs in accordance with all of their unique
requirements, but am sensitive to the fact that this may be difficult given the complexity of the
programs and time constraints.

Initial Eligibility

Not all college students receiving Pell Grants will be eligible for AC or SMART grants. Based
on the additional statutory eligibility requirements, we estimate that less than forty percent of
Pell Grant-eligible students will be eligible for an AC or SMART Grant.

Listed below are the general additional eligibility requirements for the AC and SMART grants,
beyond the general Pell Grant requirements, that reduce the number of eligible students. These
grants will be available to any Pell Grant-eligible student who:
 o Is a full-time student;
o Is a citizen of the United States; and
o Is enrolled in a two- or four-year degree-granting institution of higher education.

In addition, for AC Grants, a student must:

o Have not been previously enrolled in a program of undergraduate education (if a first-
year student);
o Have completed high school after January 1, 2006, if a first-year student; and
o Have completed high school after January 1, 2005, if a second-year student.

These criteria do not take into account the most obvious eligibility requirements for these grants
– that is, taking a rigorous secondary school program of study for the AC Grants and majoring in
math, science, or a critical foreign language for the SMART Grants. (See Attachment for full
requirements.)

Academic Competitiveness Grants for 2006-07 and 2007-08

Under the AC Grant program, Congress has established that an individual student may receive
up to $750 (for a first-year student) or $1,300 (for a second-year student) to pay for higher
education, if the student has successfully completed “…a rigorous secondary school program of
study….” Second-year recipients must also have attained at least a 3.0 GPA in their first year of
undergraduate education. According to the statute, a rigorous secondary program of study is one
that is “established by a State or local educational agency and recognized as such by the
Secretary [of Education]….” The law also provides that “The Secretary shall recognize at least
one rigorous secondary school program of study in each State….”

In recognizing these programs, I will respect the authority of each individual State to set
graduation requirements, and I will follow the law’s directive prohibiting the Department from
mandating, directing or controlling State or local curricula, programs of instruction, academic
achievement standards or assessments. I will conduct a thorough and transparent review and will
be consulting with external stakeholders to aid me in this process.

Because the law requires the U.S. Department of Education to implement the AC Grant program
for the 2006-07 academic year, time is of the essence to recognize rigorous secondary school
programs of study. For the 2006-07 academic year, each State has the option of submitting a
rigorous secondary school program of study to the Secretary for recognition. However, I
am concerned about the timing of this process, because only about half of the States have created
a statewide Honors or Advanced diploma program of study that they might consider rigorous,
and other options are needed for private and home-schooled students. Students and institutions
of higher education need to be able to understand, in the short term, who will be eligible for the
aid offered by this program. Having this knowledge as early as possible is crucial to enabling
students and financial aid officers to plan for the 2006-07 academic year.
As a first step toward recognition of rigorous secondary school programs of study, it is my
intention to recognize all existing Advanced or Honors diploma programs as rigorous secondary
school programs of study. A list of the Advanced or Honors programs that I will immediately
recognize as rigorous appears in the Attachment. However, after examining the high school
graduation requirements in all fifty States, it is clear that many States do not currently have an
Advanced or Honors diploma pathway.

Options For Students

Advanced or Honors diploma programs are not available to all high school students and there
will likely be States that do not opt to establish a new “rigorous program of study” by the June 1
deadline discussed below. To make it possible for all students to be eligible for these grants, we
must create other options for private school students, home-schooled students, students enrolled
in Department of Defense Overseas Schools, and students from States that have not designated
an Advanced or Honors diploma. In order to cover all of these students, and enable them to
understand quickly who is eligible for an AC Grant, I intend to recognize the additional
following three options as evidence of rigor in a secondary school program of study. (These
options are described in detail in the Attachment.)

ƒ The State Scholars Initiative requirements. A student may complete the courses required
under the State Scholars Initiative. This program, supported by Congress, establishes a
required set of courses that is patterned after the recommendations of the National
Commission on Excellence in Education. Fourteen States currently participate in this
program, which includes four years of English, three years of math, three years of lab
science, three-and-one-half years of social studies, and two years of a language other than
English. Eight additional States will begin participation in the State Scholars Initiative
program this year.

ƒ A set of courses similar to those required under the State Scholars Initiative. A student
may demonstrate that he or she has completed a set of courses that are similar to the
courses required under the State Scholars program.

ƒ Advanced Placement (AP) or International Baccalaureate (IB) courses and test scores.
A student may demonstrate that he or she has taken two AP or IB courses and received
passing scores on the AP or IB tests. This recognition is consistent with the
Administration’s belief that AP and IB courses demand content mastery from a student,
and the Administration’s proposal to expand the AP/IB Incentive Program.

This set of options will open up many opportunities for individual students to receive AC Grants.
In addition, a State can establish, or request recognition of, a new or different rigorous secondary
school program of study and submit information on that program to the Department for
recognition for this academic year. If a State wishes to establish an alternative rigorous
secondary school program of study to meet the requirements of this new law, the State
Educational Agency must submit its proposal to the Department by June 1, 2006, in order
to ensure that we move forward quickly enough for grants to be disbursed in a timely
fashion. If a State does not submit a proposal by this date, it will signify its affirmation of
the four options for rigor listed above. Additional details about how to submit this information
are in the Attachment.

I am recognizing the set of options identified above as rigorous secondary school programs of
study for at least the next two academic years (2006-07 and 2007-08), as we work to implement
this grant program quickly and smoothly. If a State seeks recognition of a newly established or
different secondary school program of study for the 2007-08 academic year, it should submit
information on that program to the Department by November 1, 2006.

Academic Competitiveness Grants in 2008-09 and Beyond

After this initial two-academic-year time frame, I would like to recognize a set of requirements
for academic rigor that even more accurately reflects what is required for success in college.
Over time, we will recommend a more demanding set of requirements for what is recognized as
a rigorous secondary school program of study. This action – which would begin in the 2008-09
academic year – will enable States, schools, families, and students to ready themselves to
achieve this higher goal.

In future rulemaking, the Department envisions establishing criteria that it will consider when
recognizing additional rigorous secondary school programs of study, as well as other program
provisions. The guidelines I set forth below are my suggestions, based on the latest research
available to the Department, for working toward a more accurate reflection of the preparation
students need in order to succeed in college. Additional information about these
recommendations appears in the Attachment.

First, for the 2008-09 academic year I plan to recommend that the State-defined Advanced or
Honors diplomas, State Scholars Initiative requirements, and Advanced Placement or
International Baccalaureate courses and test scores would remain as eligibility options.

Second, I plan to recommend raising the standard by which the required set of courses option is
recognized for the 2008-09 academic year. At that time, I would recognize a required set of
courses as specified for the State Scholars Initiative, with several slight revisions. These
revisions would increase the flexibility students would have in their course taking.

SMART Grants: 2006-07 and 2007-08

Under the SMART Grant program, Congress established that qualifying third- or fourth-
year students may receive up to $4,000 per year to pay for higher education, if the
student majors in mathematics, science, or a critical foreign language.

The implementation of the SMART Grant program does not present as many implementation
obstacles as the AC Grant program does, because institutions of higher education already have
most of the information that is required to determine a student’s eligibility. The only additional
information required is a list of the eligible majors in math, science, technology, engineering, and
critical foreign languages. The Department will publish a list of these majors on its Web site.

Conclusion

To improve our nation’s economic competitiveness, we must first improve our students’
academic performance. The data clearly point to a solution: higher expectations, more rigorous
coursework, and a renewed focus on math and science. With AC Grants and SMART Grants,
we have two new tools to encourage students to take – and schools to offer – the right courses to
prepare students to enter and thrive in college.

In recognizing the rigorous secondary school programs of study described in this letter, I believe
we will allow deserving students to participate in this program, and that we will encourage
students to prepare themselves academically for success in higher education and the highly
competitive workforce. States will also maintain the flexibility to submit a proposal for what
they recognize as rigorous.

In addition to helping us administer the AC and SMART Grant programs, we trust that States
will communicate about this program to their residents, particularly the educators and parents
upon whom students’ academic success ultimately depends. We look forward to working with
you in the effective and expedient implementation of these grants. Please feel free to contact us
if you have any questions.

Sincerely,

Margaret Spellings

Attachment
Additional Information on AC/SMART Grants

1. Eligible Students
An eligible student may receive an Academic Competitiveness Grant (AC Grant) of up to $750
for the first academic year of study and up to $1,300 for the second academic year of study. To
be eligible for each academic year, a student must:
• Be a U.S. citizen;
• Be a Federal Pell Grant recipient;
• Be enrolled full-time in a degree program;
• Be enrolled in the first or second academic year of his or her program of study at a two-
year or four-year degree-granting institution;
• Have completed a rigorous secondary school program of study (after January 1, 2006, if
a first-year student, and after January 1, 2005, if a second-year student);
• If a first-year student, not have been previously enrolled in an undergraduate program;
and
• If a second-year student, have at least a cumulative 3.0 grade point average on a 4.0 scale
(as set forth in regulations to be promulgated soon) for the first academic year.

An eligible student may receive a National SMART Grant of up to $4,000 for each of the third
and fourth academic years of study. To be eligible for each academic year, a student must:
• Be a U.S. citizen;
• Be a Federal Pell Grant recipient;
• Be enrolled full-time in a degree program;
• Be enrolled in a four-year degree-granting institution;
• Major in physical, life or computer science, engineering, mathematics, technology, or a
critical foreign language; and
• Have at least a cumulative 3.0 grade point average on a 4.0 scale (as set forth in
regulations to be promulgated soon).

Note that the amount of the AC or SMART Grant, when combined with a Pell Grant, may not
exceed the student’s cost of attendance. In addition, if the number of eligible students is large
enough that payment of the full grant amounts would exceed the program appropriation in any
fiscal year, then the amount of the grant to each eligible student may be ratably reduced.

2. Recognized rigorous secondary school programs of study for Academic Competitiveness

Grant program in 2006-07 and 2007-08

Listed below are the existing Advanced or Honors programs that will be immediately recognized
as rigorous. This list has been compiled based on the Department’s best efforts in this short time
period and may not be exhaustive of all rigorous secondary school programs within a State. If a
program is not correctly identified for your State, or if you have an additional rigorous program
for recognition, please indicate this to the Department by June 1.

Alabama Advanced Academic Endorsement

Arkansas College Preparatory Core Curriculum
 California Golden State Seal Merit Diploma
Delaware Distinguished Achievement Diploma
Georgia College Preparatory with Distinction Diploma
Indiana Academic Honors Diploma
Kentucky Commonwealth Diploma
Louisiana Academic Endorsement to the Standard Diploma
Massachusetts Certificate of Mastery
Missouri College Preparatory Studies Certificate
Nevada Advanced Diploma
New York Regents Diploma with Honors or Advanced Designation
Ohio Honors Diploma
Oklahoma Certificate of Distinction
Pennsylvania Certificate of Distinction
Texas Distinguished Achievement Diploma
Virginia Advanced Studies Diploma
Washington Scholar Designation
Wyoming Advanced Endorsement Diploma

In order to provide options to students, the following three programs will be recognized as
evidence of rigor in a secondary school program of study.

ƒ The State Scholars Initiative requirements. Students who participate in and complete the
State Scholars program will be eligible. This program, currently offered in fourteen
States and patterned after the recommendations of the National Commission on
Excellence in Education, requires at least four years of English, three years of math
(including Algebra I, Algebra II and Geometry), three years of lab science (biology,
chemistry, physics), three-and-one-half years of social studies, and two years of a
language other than English.

ƒ A required set of courses similar to the State Scholars Initiative. This program of study
includes four years of English, three years of Math (including Algebra I and a higher
level course such as Algebra II, Geometry, or Data Analysis and Statistics), three years of
science (including at least two courses from biology, chemistry or physics), three years of
social studies, and one year of a foreign language. The program of study must be
completed with passing grades.

ƒ Advanced Placement or International Baccalaureate courses and test scores. This

program requires a minimum of two Advanced Placement (AP) or International
Baccalaureate (IB) courses in high school and a minimum passing score on the exams for
those classes. Students must score 3 or higher on AP exams and 4 or higher on IB exams.
This recognition is consistent with the Administration’s belief that AP and IB courses
demand rigor from a student, and complements the Administration’s proposal to expand
the AP/IB Incentive Program in Fiscal Year 2007.
3. Process to Submit a State Request for Recognition

If a State Educational Agency (SEA) wishes to establish an alternative rigorous secondary school
program of study for recognition by the Secretary, the SEA should submit a proposal by June 1,
2006. The submission should describe how the successful completion of the program of study
ensures that students will be exposed to rigorous high school coursework that will prepare them
for college. The submission should also contain evidence that a State university in your State’s
system will consider students college-ready if they complete the program. Furthermore, the
submission should provide evidence that input on the program was received from the Governor,
State Educational Agency, appropriate higher education officials, and the business community.

If a State does not submit a proposal by this date, it will signify its affirmation of the four options
for rigor listed above.

Proposals should be submitted electronically by June 1, 2006, to:

Secretary Margaret Spellings

U.S. Department of Education
400 Maryland Avenue, SW
Washington, DC 20202

[email protected]

If a State wishes to establish a new program of study that would apply to the 2007-08 academic
year (that is, one that differs from the recognized programs of study in 2006-07), it must submit
information on that program of study by November 1, 2006. This will allow the Department
time to prepare for timely administration of the AC Grant program in the 2007-08 academic year.
Proposals should be submitted as described above.

4. AC Grant recognition of programs of study: 2008-09 and beyond

Future rulemaking activity will establish the criteria for the Department to recognize rigorous
programs of study and to implement other program provisions in the 2008-09 academic year and
beyond. The guidelines I am setting forth below are my suggestions for how we can more
accurately reflect what is required for success in college in the 2008-09 academic year.

ƒ State-defined Advanced or Honors diplomas.

ƒ The State Scholars Initiative requirements. As described above.

ƒ A set of course requirements similar to the State Scholars Initiative. This program of
study is more rigorous than the set of course requirements that will be recognized for the
2006-07 and 2007-08 academic years. This program of study will include four years of
English, three years of Math (including Algebra I, Algebra II and a higher level course
such as Geometry, Pre-calculus, or Data Analysis and Statistics), three years of lab
science including biology, chemistry, and physics (one of these courses can be substituted
with a higher level course), three years of social studies, and two years of a language
 other than English. Any otherwise eligible student who completes, with passing grades,
this program of study will be eligible for an AC Grant.

ƒ Advanced Placement or International Baccalaureate courses and test scores. As

described above.