The impact of federal student aid programs on higher education and policy implications are discussed. Historical information on federal aid is presented. Large amounts of federal support are devoted to student assistance funding, which is channeled into the institutions in the form of tuition or housing costs. The student aid programs are designed to promote equal opportunity for attendance at postsecondary institutions. Beyond the large size of federal aid channeled through students, additional impact is created by the method in which this money is allocated to students and institutions. The result of the policies and regulation for the Basic Educational Opportunity Grant program is that assistance is larger for low-income students and for those who attend higher-cost institutions. The ways in which these policies affect low-income, middle-income, and high-income students' college choices are discussed. Another issue is the effect of loan programs on colleges and universities. Institutions are required to determine student financial need, keep records, and take necessary steps to insure payment and/or collection on the loan. The government has issued tighter regulations on recordkeeping and the default percentage at an institution. Federal funding of student aid programs has also affected the administration of institutions. Future policy options are considered. (SW)