A new $66 million federal grant program provides money to states for helping students and families learn about and prepare for postsecondary education, and can even be used for financial aid.

The College Access Challenge Grant Program, or CACGP, is part of the College Cost Reduction and Access Act and goes into effect this year (funding is expected to continue for 2009). The program is designed to create partnerships between federal, state and local governments and philanthropic organizations to encourage more low-income students to pursue, and thrive in, education beyond high school.

What the Grant Can be Used for:

• Supplying information to students and families about the value of postsecondary education; outreach and college awareness; financial literacy; college financing; career preparation; and FAFSA assistance.
• For borrowers in high-need geographical areas or professions: Need-based grant aid; student loan cancellation/repayment; or interest rate reduction.
• Professional development for middle and high school guidance counselors and for postsecondary institution financial aid administrators and college admission counselors.

How Funds Will be Delivered:

• Each state will receive funds based on a formula determining how many residents ages 5-17 and 15-44 live below the poverty line. The minimum amount a state can receive is $330,000 for this fiscal
• Each governor will determine which state agency can apply for funding.
• States can sub-grant the money to nonprofit organizations that are experienced in offering services related to higher education access. The organization(s) must have existed prior to September 21, 2007.
• Two-thirds of the cost of activities are covered by the federal government, but each state must pay the remaining one-third from state or private funds. These may be cash or in-kind contributions, but if a state fails to pay its share, the grant amount will be reduced proportionately and the remainder given to a philanthropic organization.

Requirements:

• Services must be made available to students and families regardless of a student’s academic performance or choice of postsecondary institution, the type of student loan they receive or the source of the loan. For example, states cannot require students to be first generation college-goers, or to stay in the state in order to receive services.
• States must summarize in an annual performance report the activities and services along with their costs, number and percentage of participating students, and the amount of the non-federal matching contribution.
• Services must be offered free, with priority to students living below the poverty line. No particular lender’s loans may be promoted with grant funds.
• No more than 6 percent of funds may be used for administrative costs, and no more than 8 percent for indirect costs.

Information about the CACGP has been sent to governors, and the Department of Education hopes to award grants by early September. The program’s Web site is www.ed.gov/programs/cacg.

Special thanks to Lynn Mahaffie and Karmon Simms-Coates at the U.S. Department of Education.