; exceeds (ii) the total amount for the second preceding award year, if any, by which— (I) the tuition and required fees of each such student with such financial need; exceeds (II) the average tuition and required fees for the institution’s sector. (2) Ratable reduction If the sum of the low tuition incentive amounts of all participating institutions for an award year as determined under paragraph (1) exceeds 1⁄4 of the annual loan authority under subsection (b) for such award year, the Secretary shall ratably reduce the low tuition incentive amounts of all participating institutions until the sum of such amounts is equal to the amount that is 1⁄4 of the annual loan authority under subsection (b). (e) Federal Pell Grant and degree recipient amount For purposes of subsection (b)(1)(C), the Secretary shall determine the Federal Pell Grant and degree recipient amount for each participating institution for each award year, by calculating for each such institution the ratio of— (1) the number of students who, during the most recent year for which data are available, obtained an associate’s degree or other postsecondary degree from such participating institution and, prior to obtaining such degree, received a Federal Pell Grant for attendance at any institution of higher education