AwardYear: 1995-1996 EnterChapterNo: 9 EnterChapterTitle: State Grant Programs SectionNumber: 1 SectionTitle: State Student Incentive Grant Program PageNumbers: 3-12 [[Purpose of program]] The State Student Incentive Grant (SSIG) Program assists states in providing grants to eligible students who attend postsecondary schools and have substantial financial need. Each state may use a percentage of its SSIG funding to provide work-study assistance through community service-learning job programs. (This work- study assistance is explained in more detail beginning on page 4 of this section.) These state programs carry a variety of names that do not necessarily include the words "student incentive grants" as part of the program titles. The SSIG Program provides funds to the 50 states, the District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, the Northern Mariana Islands, and the Republic of Palau. Because of the variations in state programs, student and school inquiries about SSIG and other state grant, scholarship, and work- study assistance should be directed to the state agencies listed in Section Five of this chapter, instead of to the Department of Education (the Department). To help financial aid administrators understand the variety of state practices, this section describes some of the conditions and regulations that affect state program operations. MATCHING REQUIREMENTS States receive annual SSIG allotments (formula grants) from the Department based on each state's eligible postsecondary education enrollments. The federal allotments must be matched by funds appropriated by the state, and this matching must represent an increase in the state-appropriated grant and work-study expenditure over the amount spent during an established base year (defined as the second year before the state began participating in the SSIG Program). Also, the state must maintain its matching SSIG Program expenditures at a level NOT LESS THAN the average for the preceding three fiscal years, or at the level of the average per full-time equivalent student for those years. SSIG Program expenditures used in matching the federal allotment must be the net amount of expenditures and should not include any refunded or returned amounts that were not actually expended. Matching must be in auditable dollar amounts; tuition waivers or remissions may be considered grants only if money actually changes hands from state to school to student, and if this transfer can be documented as a cash transaction in the appropriate records at each level. [[Community service--learning job program]] Each award year, a state may use up to 20 percent of its allotment for a community service-learning job program. The student must receive compensation for work, and not a grant. The job program must be administered by postsecondary schools in the state, and each student employed under the program must be employed in work in the public interest. The employer may be a school, or a federal, state, or local public agency or private nonprofit organization under an arrangement between the school and the agency or organization. Schools, in consultation with local nonprofit, governmental, and community-based organizations, identify jobs in direct service, planning, or applied research, that are designed to improve the quality of life for residents (particularly low-income residents) of the community served. EACH COMMUNITY SERVICE-LEARNING JOB MUST-- - provide participating students community service-learning jobs related to their educational or vocational programs or goals; - be governed by conditions of employment that are considered appropriate and reasonable, based on such factors as type of work performed, geographic region, and proficiency of the employee; - pay at least the current federal minimum wage as mandated by the Fair Labor Standards Act of 1938 (but may not use the subminimum wage); - not result in the displacement of employed workers or impair existing contracts for service; and - not involve the construction, operation, or maintenance of any part of a facility used or to be used for religious worship or sectarian instruction. [[Funding reallotment]] Basic SSIG allotments not used by one state are reallotted to other qualified states. Within the constraints of federal appropriations, states are free to schedule their own funding cycles for students, but funds may not be carried over from one fiscal year to the next. However, they may be used for summer terms, provided they are obligated within the program year (July 1 through June 30) for which they were appropriated. ADMINISTRATIVE PATTERNS There are three ways in which a state may choose to administer its program: it may choose to use a centralized administrative pattern, a decentralized administrative pattern, or a combination of both. Whichever method is used, a state must use all federal funds and state matching funds for student awards. (A state cannot use either federal funds or its state matching funds to help defray administrative costs.) [[Centralized administration]] Most states, particularly those with well-established state student assistance programs, use a centralized administrative pattern. That is where a single state agency receives and processes student applications, notifies students of awards, verifies attendance, makes disbursements, and keeps complete records on all student awards. [[Decentralized administration]] In other states, particularly those with relatively new state programs, the designated state agency delegates certain functions to participating schools. In these cases, funds available through the state agency are generally sub-allocated to eligible schools on the basis of enrollment or need formulas. The schools recommend SSIG recipients to the state agency, which approves individual awards from these fund allotments. In these states that use decentralized administration, funds awarded under these programs are still considered to be state aid and not institutional aid. [[Location of student files]] In the centrally administered state programs, actual student files are located in the state agency. In the decentralized form of state administration, where schools process much of the student information, the financial aid administrator gives the state agency the information needed for formal approval of individual student awards. In either case, to monitor the use of SSIG funds, student files at schools are examined to verify that recipients met all eligibility criteria and received the correct award amount. SCHOOL PARTICIPATION Within the limits of federal statutes and regulations, states determine eligibility standards in terms of their own fiscal, constitutional, and statutory restraints. See Chapter Three on institutional eligibility for details about the federal limits placed on school participation. Schools that are licensed by their state agency as clock-hour institutions must use clock hours to determine a student's eligibility for SFA funds. For further information, see Chapter Three. All nonprofit institutions of higher education in a state are eligible to participate, except when participation violates the state's constitution or a state law enacted before October 1, 1978. While states are not required to include proprietary (for profit) schools in their state programs, 33 states currently make SSIG awards available to students attending such schools. [[Other factors affecting participation]] School participation may also be affected by some states sub- allocating available SSIG funds to the various types of schools on the basis of enrollment, need, the availability of other non-SSIG aid, and other relevant criteria. In such instances, money not claimed for student awards at one school may be reclaimed by the state and reassigned to other schools. STUDENT ELIGIBILITY Student eligibility to receive aid from the SSIG Program differs from state to state according to constitutional, statutory, or policy restrictions. (Some states have legislated formulas for determining student eligibility and the amount of assistance given to individual students.) However, to be eligible for assistance under the SSIG Program, all students must meet the relevant eligibility requirements contained in Subpart A of the General Provisions regulations (34 CFR Part 668.7) and must demonstrate substantial financial need as determined in accordance with the states' criteria as approved by the Secretary. The standards that states may use to determine need are discussed in more detail in the subsection on Student Application Procedures and Awards beginning on page 8 of this section. The relevant eligibility requirements of Subpart A are summarized briefly below. These requirements are covered in greater detail in Chapter Two of the Handbook. [[General eligibility requirements to receive SFA funds]] IN GENERAL, THE STUDENT MUST-- - be either a U.S. citizen or an eligible noncitizen; - be enrolled as a regular student in an eligible program at an eligible school; - have a high school diploma or its recognized equivalent (or be beyond the age of compulsory school attendance in the state where the school is located and have passed an independently administered test approved by the Department; - be making satisfactory academic progress in his or her course of study; and - file a Statement of Educational Purpose/Certification Statement on Refunds and Default, a Statement of Registration Status, and a Statement of Updated Information. A STUDENT IS NOT ELIGIBLE FOR SFA FUNDS IF HE OR SHE-- - is enrolled in an elementary or secondary school; - has borrowed in excess of the annual or aggregate limits for the SFA loan programs; or - is in default on a student loan or owes a refund on a student grant from the SFA programs. [[Eliminating SSIG overpayments]] If, however, a student owes a refund on an SSIG overpayment, that student would still be eligible to receive further SFA funds if he or she meets all other eligibility requirements and if the school can eliminate the overpayment by adjusting financial aid payments (other than Federal Pell Grants) in the same award period in which the overpayment occurred. Other factors that determine whether a student is eligible for an SSIG award include the state's definition of substantial financial need, the method of determining maximum awards, and the costs that can be covered. Some states limit awards to the cost for tuition and fees; others include allowances for room, board, and other costs. Some have allowances for commuters. Many state grant programs exclude part-time students and those who attend schools outside the state. Some states have reciprocal arrangements with neighboring states, so that students may receive SSIG funds from their home state even though they are enrolled in a school in another state. SSIG funds may be awarded to students participating in programs of study abroad that are approved for credit by the school. A state's SSIG independent student program funding should be comparable to the overall state program if the entire state program is not contained in the state's SSIG Program. To the extent practicable, the proportion of SSIG funds awarded to independent student's in the SSIG Program shall be the same proportion of funds awarded to independent students in the state program or programs of which the state's SSIG Program is a part. If a state awards grants to independent or less-than-full-time students, it must make a reasonable portion of its allocation available for these awards. The Secretary of Education (the Secretary) will determine if the allocation is reasonable on a case- by-case basis, if necessary. If the state's allocation is based on a formula that includes the financial need of independent or less-than-full-time students, the state must ensure that those students receive a reasonable proportion of SSIG funds. STUDENT APPLICATION PROCEDURES AND AWARDS Students apply to the state agency either directly or indirectly through the schools. Every award requires the official state agency's formal approval, based on a determination of need. (Section Five of this chapter contains a listing of these state agencies.) [[Maximum award]] The maximum award that a student may receive is $5,000 per academic year. The maximum award is reduced proportionately for students who attend part-time. Some states set maximum awards that are less than $5,000. Most states limit SSIG awards to undergraduates attending at least halftime. However, at each state's option, graduate, less-than-half- time, and other nontraditional students may also be eligible to receive SSIG awards. States may determine whether to make individual SSIG awards that vary according to student need or to give a set amount to all students who meet the established need criteria. [[Determining substantial need]] Student recipients are selected annually on the basis of substantial need, according to criteria established by the state and approved by the Department. A state may define need in terms of income, expected family contribution, or relative need, as measured by cost of attendance minus available resources. Regardless of which need analysis system the State selects, the designated state agency is responsible for final approval of individual student recipients, thus allowing each state to develop consistent methods in awarding aid to candidates throughout the state. [[Need analysis systems]] Most states measure need using a single need analysis system for all applicants (predominantly the Federal Needs Analysis Methodology). However, in decentralized programs, where schools recommend student candidates for awards subject to the designated state agency's approval, student applications may be processed according to the different need analysis systems used by the various schools. In any event, the designated state agency has final authority for selecting recipients who meet the need criteria under standards established for the statewide program. [[Determining a student's dependency status]] As discussed in Chapter Two, a student who applies for aid from any of the SFA programs must include parental information on the application if the student is dependent. An independent student need only include his or her financial information (and that of a spouse, if married). The criteria for applying as an independent student are listed in Chapter Two. [[Alternative criteriafor determining dependency status]] For the 1995-96 award year and subsequent years, the Department may approve, on a case-by-case basis, a state's use of criteria that vary from those listed in Chapter Two. The state must show that it had good reason to use different criteria. States that wish to use a variant definition of "independent student" must provide information concerning their "independent student" definition at the time of application for program funds. The information should include a justification, with accompanying supporting documentation, showing why a variant definition should be approved. For example, a state may want to use its own definition of "independent student" because it may incur excessive costs if it is required to use the federal definition. In approving a state's definition of "independent student," the Department might also consider the extent to which the new definition imposes additional data requirements beyond those provided for by the federal definition and the Federal Needs Analysis Methodology. A state's variant definition might not totally differ from the federal definition. For example, a state might use the federal definition without the professional judgment provision. [[Cost of applying]] To award a student state aid, a state may require a student to provide applicant information on the Free Application for Federal Student Aid (FAFSA) or on another free form. In addition, the state may require a student to provide supplemental information on a fee-based supplemental form. If there is a fee for submitting and processing the state information on the supplemental form, the fee must be payable to the state. This fee must be payable to the state regardless of whether the information may also be used for institutional aid. In the case of a decentralized state grant program under which schools participating in the state's SSIG Program award state grant funds, these funds are still considered to be state aid and not institutional aid. For more detailed information on how a decentralized program works, see page 5 of this section. [[Records and reports]] State agencies responsible for administering SSIG funds must be able to document their decisions and disbursements from their own central records, from school records, or from both. Variations of student/school rosters are often sent back and forth between the state agency and the schools to verify attendance, provide information related to student need, document disbursement of funds to students or to student accounts, guard against overawards, and help provide required records and reports. FISCAL AND REPORTING RELATIONSHIPS BETWEEN SCHOOLS AND THE STATE AGENCY In general, fiscal and reporting relationships between participating schools and the state agency vary according to whether the state's programs are administered according to a centralized or decentralized pattern, or a combination of these two patterns. In any case, the state agency must be held accountable for the disbursement of federal funds and for making the required reports to the Department of Education. States are given considerable leeway in the standards used to demonstrate fiscal responsibility for the SSIG Program. However, participating schools must meet the federal standards of fiscal responsibility described in Chapter Three of the Handbook. At a minimum, even in the most centralized administrative pattern, schools must supply assurances regarding student academic progress, the status of grant refunds, and the status of loan defaults. Schools must also document student acknowledgment of awards if funds are paid to the school on behalf of the recipient, and cooperate in packaging aid to avoid overawards. In decentralized systems, where the state agency depends on the school to help screen applicants, the school's records must also supply need analysis documentation to justify formal approval of individual awards by the official state agency. Individual student awards are subject to approval by the designated state agency. Schools may not transfer awards from one student to another without that agency's approval. Schools and state agencies should maintain regular communication so that any funds that become available later in the year will be used for qualified students. All funds (federal plus state) recovered from overawards should be reissued to other qualified students during the applicable award period unless records for the period have been closed. If these funds are not reissued to qualified students, the state must return the recovered federal portion to the Department. [[School reports document fund disbursement]] The state agency requires certain school reports to document the disbursement of federal funds to student recipients. The school reports also provide information needed to improve efficiency in the operation of state programs, and to provide data for state budgets and for annual reports to the Department. The actual form and content of school reports will vary from state to state, depending upon, among other factors, the size and maturity of the state programs. There are no standard formats or channels for these school reports. For example, information about recipients by income level may come either from the central office records or from the schools. Communication may follow established procedures or may be developed through cooperative efforts of state and school representatives. [[Student and school inquiries]] For specific information on state student financial assistance policy, student and school eligibility, and grants to students attending out- of-state schools, contact the SSIG state agency program individuals listed in Section Five of this chapter. |