In December 2004, the U.S. Department of Education announced that it will update the amount it allows families to deduct for state and other tax payments when applying for financial aid. These changes affect the way both the Federal Pell Grant and the Minnesota State Grant programs calculate a family's ability to pay. Larger assigned family responsibilities generally translate into smaller state and federal grants for students. The Higher Education Services Office has prepared this report estimating the aggregate projected impact of the update on Minnesota residents. In summary, Minnesota residents attending Minnesota institutions are expected to see an estimated $12.37 million less in federal and state grants, or about 4.5 percent less, than they would have without the update in the Federal Needs Analysis. (Contains 6 charts and 1 footnote.)