The "Higher Education Reconciliation Act of 2005" created two new grant programs for undergraduates: the Academic Competitiveness Grant (ACG) program and National Science and Mathematics Access to Retain Talent (National SMART) Grant program. The ACG program is intended to encourage students to take challenging courses in high school and thus increase their likelihood of success in college. The National SMART Grant program is intended to encourage students to pursue certain college majors considered in high demand in the global economy (mathematics, science, engineering, technology, and certain languages deemed critical to the national interest). Congress provided $790 million for the 2006-07 academic year for these new programs, and $4.5 billion over five years. The programs will end after the 2010-11 academic year unless reauthorized so it is important to know soon whether the programs are having the desired effect and if there are any unintended consequences that should be addressed. In evaluating the ACG and National SMART Grant programs during the first four years (through 2009-10), the U.S. Department of Education sought to determine: (1) lessons learned from the early implementation of the program that will lead to program improvement as well as any identifiable unintended consequences; (2) how states differ in how they define "rigorous secondary school programs of study" and whether states differ in the rate at which Pell Grant recipients complete the course work required under these definitions to qualify for an ACG or major in the specified fields to qualify for a National SMART Grant; (3) whether financial incentives induce more economically disadvantaged high school students to complete a rigorous program of study and to enroll and succeed in postsecondary education; (4) the gap between students in lower-and higher-income families in meeting the standards of the ACGs and National SMART Grants; and (5) whether the availability of National SMART Grants is associated with an increase in the proportion of Pell Grant recipients who major in and receive degrees in mathematics, science, engineering, technology, and critical languages; and (6) whether Pell Grant recipients with National SMART Grants differ from those without them. This report synthesizes information gathered during the first year of the study, which covers the first year that grants were awarded (2006-07). Six chapters comprise this report. Following an Introduction, Chapter 2 identifies implementation issues from the perspective of major stakeholders by conducting interviews, reviewing documents, and monitoring stakeholder Web sites. Chapter 3 compares information on the state-specific rigorous high school programs approved by the secretary of education and on state high school graduation requirements. Chapter 4 examines 2006-07 participation in the programs overall, across states, by student characteristics, and (for National SMART Grants) by field of study using the COD-CPS Interface Grant Recipient File maintained by the Office of Federal Student Aid. Chapter 5 analyzes historical data to determine national trends in high school course-taking and develops estimates of eligibility for ACGs and National SMART Grants. This baseline information--obtained from the National Assessment of Educational Progress (NAEP), Education Longitudinal Study of 2002 (ELS), Beginning Postsecondary Student Aid Studies (BPS), National Postsecondary Student Aid Studies (NPSAS), and the Integrated Postsecondary Education Data System (IPEDS)--will provide a benchmark against which to examine current and future participation in the ACG and National SMART Grant programs. Finally, Chapter 6 summarizes Department of Education and stakeholder recommendations for improving the programs. Appended are: (A) List of National SMART Grant-Eligible Majors; (B) History of the ACG and National SMART Grant Programs; (C) "High Schools That Work" Award of Educational Achievement; (D) National Data Sources: (E) Supplemental Tables on ACG and National SMART Grant Program Participation by Institution Type in 2006-07; (F) Supplemental Tables on High School Course Work; and (G) Supplemental Tables on ACG and National SMART Grant Program Participation by State in 2006-07. (Contains 34 figures and 32 tables.