The process whereby appropriated federal funds for the campus-based student aid programs are allocated to the states and to postsecondary education institutions is reviewed. The three campus-based programs are the College Work-Study, National Direct Student Loan, and Supplemental Educational Opportunity Grant student aid programs. Changes imposed by current funding levels and the pre-1981 and post-1981 funding forumla for the three programs are examined. The allocation process is described for both the state and institutional levels. There are four problems in realizing equity in the state allocation of student aid funds: (1) coming to general agreement about what is equitable, (2) developing an operational definition of equity, (3) defining key terms, and (4) reducing tension developed between shifting state situations. It is suggested that the program allocation formulae reflect a desire to achieve a stable funding pattern for institutions rather than achieving a more equitable funding of students. Appended data provide allocations for the three programs for 1981-1982, total enrollment by full- and part-time status for 1981-1982, the 1980 population aged 15-19, and the number of unemployed individuals in 1982. A glossary is appended. (SW)