Federal Merit Scholarship Act

Federal Merit Scholarship Act - Amends the Higher Eduation Act of 1965 to establish a Federal Merit Scholarship Program.

Authorizes the Secretary of Education to make grants to States to enable States to award scholarships to individuals who have demonstrated outstanding academic achievement and who show promise of continued academic achievement.

Provides that such scholarships shall be awarded for a period of one academic year for the first year of study at any institution of higher education which the student chooses to attend.

Provides for allocation of program funds to each State according to a formula based on the number of individuals in the State eligible for such scholarships.

Sets forth requirements for program agreements between the Secretary and each State desiring to participate in such scholarship program.

Requires that each student awarded such a scholarship: (1) be a graduate of a public or private secondary school; (2) have been admitted for enrollment at an institution of higher education; and (3) show promise of continued academic achievement, pursuant to criteria established by the Secretary.

Authorizes the State educational agency (SEA) to establish the criteria for the selection of merit scholars. Directs the SEA to adopt selection procedures designed to assure that ten individuals will be selected from among residents of each congressional district in a State (and in the case of the District of Columbia and the Commonwealth of Puerto Rico not to exceed ten individuals selected in such District or Commonwealth).

Provides that each student awarded a merit scholarship shall receive a stipend of $1,500 for the academic year of study for which it is awarded.

Directs the SEA to establish procedures under which merit scholars establish that they are maintaining satisfactory proficiency and devoting full time to the course of study for which the scholarship was awarded.

Directs the SEA to make arrangements to award merit scholarships at a place in each State which is convenient to the individuals selected as recipients. Provides that, to the extent possible, the awards shall be made by Members of the Senate and Members of the House of Representatives (or by the Delegate from the District of Columbia or the Resident Commissioner of the Commonwealth of Puerto Rico) who represent the State, Commonwealth, or District from which the individuals come. Requires that the selection process be completed and the awards made prior to August 1 in each year, except that such awards shall be made in the first year after the date of enactment of this subpart as soon as possible after such date.

Provides that nothing in this or any other Act shall be construed to permit the receipt of a scholarship under the Federal Merit Scholarship Program to be counted for any needs test in connection with the awarding of any grant or the making of any loan under the Higher Education Act of 1965 or any other provision of Federal law relating to Federal assistance.

Authorizes appropriations for FY 1986 through 1988 to carry out the Federal Merit Scholarship Program.