20 U.S.C. § 1070a–25 — Scholarship component

(a) In general (1) States In order to receive a grant under this division, an eligible entity described in section 1070a–21(c)(1) of this title must establish or maintain a financial assistance program that awards scholarships to students under the requirements of this section. The Secretary must encourage the eligible entity to ensure that a scholarship provided under this section is available to an eligible student for use at any institution of higher education. (2) Partnerships An eligible entity described in section 1070a–21(c)(2) of this title may award scholarships to eligible students under the requirements of this section. (b) Limitation (1) In general Subject to paragraph (2), each eligible entity described in section 1070a–21(c)(1) of this title that receives a grant under this division must use at least 25 percent and no more than 50 percent of the grant funds for activities described in section 1070a–24 of this title (except for the activity described in subsection (a)(4) of such section), with the remainder of those funds to be used for a scholarship program under this section under such subsection. (2) Exception Notwithstanding paragraph (1), the Secretary may allow an eligible entity to use more than 50 percent of grant funds received under this division for such activities, if the eligible entity demonstrates that the eligible entity has another means of providing the students with the financial assistance described in this section and describes such means in the application submitted under section 1070a–23 of this title . (c) Notification of eligibility Each eligible entity providing scholarships under this section must provide information on the eligibility requirements for the scholarships to all participating students upon the students’ entry into the programs assisted under this division. (d) Grant amounts The maximum amount of a scholarship that an eligible student must be eligible to receive under this section must be established by the eligible entity. The minimum amount of the scholarship each fiscal year must not be less than the minimum Federal Pell Grant award under section 1070a of this title for such award year. (e) Portability of assistance (1) In general Each eligible entity described in section 1070a–21(c)(1) of this title that receives a grant under this division must hold in reserve, for the students served by such grant as described in section 1070a–22(d)(1)(A) or 1070a–24(d) of this title, an amount that is at least the minimum scholarship amount described in subsection (d), multiplied by the number of students the eligible entity estimates will meet the requirements of paragraph (2). (2) Requirement for portability Funds held in reserve under paragraph (1) must be made available to an eligible student when the eligible student has— (A) completed a secondary school diploma, its recognized equivalent, or another recognized alternative standard for individuals with disabilities; and (B) enrolled in an institution of higher education. (3) Qualified educational expenses Funds available to an eligible student under this subsection may be used for— (A) tuition, fees, books, supplies, and equipment required for the enrollment or attendance of the eligible student at an institution of higher education; and (B) for an eligible student with special needs, expenses for special needs services that are incurred in connection with such enrollment or attendance. (4) Return of funds (A) Redistribution (i) In general Funds held in reserve under paragraph (1) that are not used by an eligible student within six years of the student’s scheduled completion of secondary school may be redistributed by the eligible entity to other eligible students. (ii) Return of excess to the Secretary If, after meeting the requirements of paragraph (1) and, if applicable, redistributing excess funds under clause (i) of this subparagraph, an eligible entity has funds held in reserve under paragraph (1) that remain available, the eligible entity must return such remaining reserved funds to the Secretary for distribution to other grantees under this division under the funding rules described in section 1070a–22(a) of this title . (B) Nonparticipating entity Notwithstanding subparagraph (A), for an eligible entity that does not receive assistance under this subpart for six fiscal years, the eligible entity must return any funds held in reserve under paragraph (1) that are not awarded or obligated to eligible students to the Secretary for distribution to other grantees under this division. (f) Relation to other assistance Scholarships provided under this section must not be considered for purposes of awarding Federal grant assistance under this subchapter, except that in no case must the total amount of student financial assistance awarded to a student under this subchapter exceed that student’s total cost of attendance. (g) Eligible students A student eligible for assistance under this section is a student who— (1) is less than 22 years old at time of first scholarship award under this section; (2) receives a secondary school diploma or its recognized equivalent on or after January 1, 1993 ; (3) is enrolled or accepted for enrollment in a program of undergraduate instruction at an institution of higher education that is located within the State’s boundaries, but, at the State’s option, an eligible entity may offer scholarship program portability for recipients who attend institutions of higher education outside such State; and (4) who participated in the activities required under section 1070a–24(a) of this title .