Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

State Grant Programs - State Student Incentive Grant Program

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.