The federal/state partnership in providing student financial assistance and the interest of the federal government in maintaining this state commitment to assist needy students are examined. The State Student Incentive Grant (SSIG) program, which was begun in 1974, was designed to provide an incentive for states to develop and maintain student financial aid programs. The federal government allocates funds to the states under the condition that the states match the federal contribution on at least a dollar-for-dollar basis. Federal SSIG funds are distributed among the states based on their postsecondary enrollments. Since 1977, the total amount of grant aid provided by the states has increased steadily. In 1984 all 50 states and the District of Columbia support the program. In addition to the dollars provided directly to students, states are devoting billions of dollars collectively to maintain lower-cost public colleges. Since 1981 the Reagan administration has called for the elimination of the SSIG program, arguing that it has already achieved its intended goals. It is advocated that the SSIG program be retained to continue providing an incentive for states to fund financial aid programs. (SW)