SUPPORTING STATEMENT

FOR

# PAPERWORK REDUCTION ACT SUBMISSION

## Justification 

1\. **Circumstances Making Collection of Information Necessary**

The Federal Pell Grant, the Academic Competitiveness Grant (ACG), and
the National Science and Mathematics Access to Retain Talent Grant
(National SMART Grant) programs are student financial assistance
programs authorized under the Higher Education Act of 1965 (HEA), as
amended. These programs provide grant assistance to an eligible student
attending an institution of higher education. The institution determines
the student's award and disburses program funds to the student on behalf
of the Department (ED). However, because ACG and National SMART are new
grant programs for the 2006-2007 award year, some new information needs
to be collected (in addition to the information collected for the
Federal Pell Grant Program) to enable the institution to determine a
student's eligibility under these programs. To account for the funds
disbursed, institutions report student payment information to ED
electronically. Electronic reporting is conducted through the Common
Origination and Disbursement (COD) system. The COD system is used by
institutions to request, report, and reconcile grant funds received from
these programs. More information about the COD system is available on
ED's website at [http://ifap.ed.gov](http://ifap.ed.gov/) under the
section "On-line References."

2\. **Use of Information**

ED will use the information collected to help ensure compliance with
fiscal and administrative requirements under the HEA for the Federal
Pell Grant, ACG, and National SMART programs, and under 34 CFR 690 of
the Federal Pell Grant Program regulations, 34 CRF 691 of the ACG and
National SMART Grant program regulations, and 34 CFR 668 of the General
Provisions regulations.

3\. **Use of Information Technology**

COD is a multi-functional application providing options to participating
institutions for processing Federal grant program data electronically.
COD may be used as a high volume transaction application, or as a fully
web-enabled application for which ED provides the necessary software
(EDExpress) for no charge. However, institutions are not required to use
EXExpress -- they may develop their own software, purchase software, or
contract with a third-party servicer to report Pell Grant, ACG, or
National SMART Program data to ED under the COD system.

4\. **Efforts to Identify Duplication**

There is no information available from any other source that contains
the information in this data collection.

5\. **Methods to Minimize Burden on Small Entities**

ED makes available for no charge software (EDExpress) that an
institution may use to report Federal grant data in the XML format
required under the COD system.

6\. **Consequences If Information Is Not Collected**

Without this information, ED cannot process payments to institutions for
students eligible to receive aid under the Federal Pell Grant, ACG, and
National SMART Programs.

7\. **Special Circumstances**

Institutions are required to report Federal grant data to ED more
frequently than quarterly to account for the expenditure of Federal
funds in a timely manner and to otherwise meet the program's statutory
and regulatory requirements.

8\. **Federal Register Comments and Persons Consulted Outside the
Agency**

ED meets regularly with members of the financial aid community and at
national, regional and state association conferences, as well as at the
ED-sponsored conferences, on ways to improve the COD system.

9\. **Respondent Payment or Gifts**

The Department will not provide payment or gifts to the users of the COD
system. The submission of Federal Pell Grant, ACG, and National SMART
Grant data is mandatory.

10\. **Assurances of Confidentiality**.

No assurance of confidentiality is provided to respondents.

11\. **Questions of Sensitive Nature**

No questions of a sensitive nature are requested in COD.

12\. **Estimate of Hour Burden**

Frequency of response: The minimum reporting requirement is one record
for origination and disbursement data per student, per grant award, per
award year. Institutions may correct an accepted COD record as many
times as they wish, but are not required to submit changes unless the
student is eligible for more than the accepted origination amount
established in COD.

The total annual burden hours are estimated to be 494,950. The breakdown
of how this was established follows:

**Federal Pell Grant Program:**

For the 2006-2007 award year, the number of student recipients for the
Federal Pell Grant Program is estimated to be 5,120,000, multiplied by
approximately .07 hours per recipient (to enter data for COD) = 358,400
hours. The burden per institution is estimated at 68 hours (358,400
total hours divided by 5,238 institutions currently participating in the
Federal Pell Grant program). (In the past we counted 350,000 burden
hours).

We estimate the burden costs to be \$15 to \$20 per hour. The average
burden cost estimate for an institution is between \$1026 (68 hours X
\$15 per hour) and \$1368 (68 hours X \$20 per hour). For the 5,238
institutions the total cost is between \$5,376,000 and \$7,168,000. The
average total cost is estimated at \$6,272,000.

**ACG and National SMART Programs:**

For the 2006-2007 award year, the number of student recipients for the
ACG and National SMART programs is estimated to be 535,000, multiplied
by approximately .08 hours per respondent (to enter data for COD) =
42,800 hours. The burden for institutions is estimated at 13 hours
(42,800 total hours divided by 3,298 institutions that qualify to
participate in the ACG/National SMART Programs).

We estimate the burden costs to be \$15 to \$20 per hour. The average
burden cost estimate for an institution is between \$195 (13 hours X
\$15 per hour) and \$260 (13 hours X \$20 per hour). For the 3,298
institutions the total cost is between \$642,000 and \$856,000. The
average total cost is estimated at \$749,000.

In addition, because ACG and National SMART are new programs starting in
the 2006-2007 award year, some additional information relating to
whether a student completed a rigorous high school program (as provided
in 34 CFR 691.15) needs to be analyzed to award the grant, and that
information needs to be maintained by the institution as provided in 34
CFR 691.82. With regard to evaluating documentation of a rigorous high
school program, and subsequent reporting to COD, we estimate the burden
to be .17 hours per student recipient multiplied by the total number of
estimated recipients 535,000, or 90,950 burden hours. The burden for
institutions is estimated at .33 hours (90,950 total hours divided by
3,298 institutions that qualify to participate in the ACG/National SMART
Programs).

We estimate the burden costs to be \$15 to \$20 per hour. The average
burden cost estimate for an institution is between \$5 (.33 hours X \$15
per hour) and \$7 (.33 hours X \$20 per hour). For the 3,298
institutions the total cost is between \$16,325 and \$21,767. The
average total cost is estimated at \$19,046.

For a small number of student recipients (estimated at 35,000 of the
total number of 535,000), institutions that don't normally request high
school transcripts as part of their admissions process would need to
obtain documentation that a student completed a rigorous high school
program from the student's high school or other cognizant authority, and
maintain that documentation as provided in 34 CFR 691.82. We estimate
this burden to be 35,000 student recipients multiplied by .08 hours per
recipient, or 2,800 burden hours.

We estimate the burden costs to be \$15 to \$20 per hour. The average
burden cost estimate for an institution is between \$1.20 (.08 hours X
\$15 per hour) and \$1.60 (.08 hours X \$20 per hour). For the 3,298
institutions the total cost is between \$3,958 and \$5,277. The average
total cost is estimated at \$4,617.

13\. **Estimate of Cost Burden**

There are no additional costs to respondents other than those listed
above in #12.

14\. **Estimate of Annual Cost to the Federal Government**

The annual cost to the Federal Government for the processing of this
information is estimated to be \$24,700,000. This cost includes ED labor
costs, contractor staff time in preparing and electronically
transmitting the information; contractor costs associated with
processing the payment data submitted by institutions; and recording and
analyzing the data for funding decisions and ensuring the institution's
compliance with the program statute and regulations.

ED labor and program administration costs = \$2,700,000.

Contractor costs for processing the student payment

data =\$22,000,000.

15\. **Program Changes or Adjustments**

The Budget Reconciliation Act (Public Law 109-171) created two new
Federal Grant programs, ACG and National SMART, increasing burden by a
total of 144,950 hours.

16\. **Plans for Tabulation and Publication of Results**

No tabulation or publication of the results will take place.

17\. **Approval to not Display OMB Expiration Date**

All data collection instruments will include the OMB expiration date.

18\. **Explanation of Exceptions**

Except for the new documentation requirements related to a rigorous high
school program, as provided in 34 CFR 691.83, the record retention and
recordkeeping requirements are not specified in this collection because
those requirements apply to all Federal Student Aid programs and are set
forth in Title IV Program regulations, particularly 34 CFR 668.24.