Financial aid in American higher education is discussed with a primary focus on undergraduate education. Some major issues pertaining to public policy and pricing in higher education are considered, and the practice of subsidizing students, with special attention to the role of the federal government, is briefly reviewed. Information regarding access to higher education for the poor, minorities, women, and the middle class is presented, and the source of funds for financial aid and the methods of distributing those funds are discussed. In the private sector, private money provided the subsidy while in the state systems public institutional support permitted tuition to remain relatively low, and expansion of capacity made it possible for virtually anyone seeking a place to find one. The federal government is a relatively new part of this enterprise, but in a fairly short period of time its role has grown enormously. Promoting equality of opportunity has been the federal government's single most visible and identifiable goal with respect to higher education. Information about participation in higher education based on family income, race, family income and aptitude taken jointly, and sex is presented. The state of the job market for college graduates is briefly considered. The determination of a student's need for financial aid includes taking into account the expected parents' contribution. Calculation of student eligibility index for the Basic Educational Opportunity Grant program is covered. (SW)