The complex rules and regulations of the student financial aid industry have alienated and confused both students and parents, especially those from lower income families. Unless simplified, the financial aid application process will continue to act as a deterrent to participation in the U.S. educational system. Families managing to overcome the initial obstacles presented by the process are often faced with a financial aid needs analysis in which college costs, particularly indirect ones such as lost earnings, are severely underestimated. Financial aid packages must begin to reflect students' financial and college attendance realities. Even as public institutions carry the burden of educating more and more people, the vitality of the nation's public educational system has declined. A decade dominated by the social and economic policies of Reaganomics, particularly the decision to issue more aid in the form of loans rather than grants, has curtailed the aspirations and access of minority and lower income students. When loans comprise the primary financial aid package, the net benefits of a community college education are reduced and the risk of loan default looms large. At the City University of New York, college participation between 1975 and 1986 dropped for Blacks from 32.0% to 27.8% and for Hispanics from 20.4% to 16.1%, reflecting these students' vulnerability to cutbacks in financial aid. In this context, widespread concern that the door of educational opportunity is closing, particularly for poor people, seems warranted. That many young people will be limited to a future of unemployment, military service, or crime is indeed a sobering prospect. (JMC)