Despite the mantra that education is primarily a state responsibility, the federal government is an important and influential player when it comes to providing higher education to the nation's students. The federal government invests roughly $25 billion annually in higher education excluding loans that are ultimately repaid, military benefits that are earned, and tax credits. State policymakers need to understand the nature of this federal investment and the rationale behind it if they are to gain the maximum advantage from their state investments. Then, they can begin to align state and federal policies so that they complement each other to the extent that this is possible and to design state policies in ways that maximize the take-up of federal dollars in the state, both to benefit students and to relieve state fiscal pressures. This "Policy Insights" is part of the "Changing Direction: Integrating Higher Education Financial Aid and Financing Policy" project.