The State Student Incentive Grants (SSIG) program is examined with particular reference to its purposes, its relation to other federal grant programs, and its success as an incentive to other states. The origin and development of the SSIG program is reviewed beginning with its creation as part of the Education Amendments of 1972. Goals for the program included: (1) to encourage the creation of state student grant programs; (2) to encourage increased state expenditures on such programs; (3) to increase the federal assistance available to needy undergraduates; and (4) to foster better linkages between state and federal grant programs. It is suggested that the record of the SSIG program in achieving these goals is mixed. The program has been successful in meeting the first objective but has not encouraged increased state expenditures. The SSIG has modestly increased the overall amount of financial assistance available to students but structural features of the program that limit its effectiveness are noted. Options are proposed to modify and improve the program. These include: (1) eliminate the distinction between initial and continuation awards; (2) require state matching in all states; (3) define "substantial need" more narrowly; (4) modify further or eliminate the nonprofit requirement; (5) modify the allocation formula; and (6) change the base year. Major changes that are advocated include insuring access for needy students to high-cost colleges, equalization of state grant expenditures, and extending eligibility for state grants to all SSIG-eligible students. (Author/SF)