Each year, the National Association of State Student Grant and Aid Programs (NASSGAP) completes a survey regarding state-funded expenditures for postsecondary student financial aid. This report, the 40th annual survey, represents data from academic year 2008-09. Data highlights of this survey include: (1) In the 2008-2009 academic year, the states awarded about $10.3 billion in total state funded student financial aid, an increase of about 2.7 percent in nominal and constant dollar terms from the $10.0 billion in aid awarded in 2007-08; (2) The majority of state aid is in the form of grants. In 2008-09, more than 4.0 million grant awards were made representing about $8.4 billion in need and nonneed-based grant aid, an increase of about 5.2 percent from the $8.0 billion in grants awarded in 2007-08. Of the grant funds awarded in 2008-09, 72 percent was need-based and 28 percent was nonneed-based, almost the same percentage as seen in 2007-08; (3) Funding for undergraduate need-based grant aid increased $280 million nationwide from about $5.7 billion in 2007-08 to about $6.0 billion in 2008-09, an increase of 5 percent; (4) Ten states (California, New York, Texas, Illinois, Pennsylvania, North Carolina, New Jersey, Indiana, Ohio, and Washington) collectively awarded more than $4.1 billion in undergraduate need-based grant aid, accounting for about 66 percent of all aid of this type; and (5) States provided more than $1.8 billion in nongrant student aid, including loans, loan assumptions, conditional grants, work-study, and tuition waivers, down 7.6 percent from last year. Loans and tuition waivers accounted for 71 percent of nongrant funds awarded. All fifty states (plus Washington DC and Puerto Rico) reported state-funded undergraduate programs with awards based solely on need. Thirty states identified programs which made awards based only on merit. Exclusively need-based aid constituted 48 percent of all aid to undergraduates, exclusively merit-based aid accounted for 19 percent, with the rest, 33 percent, accounted for by other programs and by programs with both need and merit components. The amount of undergraduate aid awarded in 2008-09 through programs with a merit component increased to about $3.2 billion from about 3.0 billion in 2007-08. This compares to $4.5 billion awarded to undergraduates through programs based only on need. South Carolina, Georgia, Washington DC, and West Virginia provided the greatest amount of grant aid on a per capita basis and along with Kentucky and Tennessee were the largest providers of aid per capita for the population between ages 18 and 24. South Carolina, Georgia, Tennessee, New Jersey, and West Virginia provided the most undergraduate grant dollars compared to undergraduate full time equivalent enrollment. South Carolina, Vermont, Tennessee, Georgia and West Virginia had the highest proportion of total expenditures for state-funded grants compared to Sate fiscal support for higher education. (Contains 14 tables and 6 figures.) [For "39th Annual Survey Report on State-Sponsored Student Financial Aid, Academic Year 2007-2008," see ED506933.]