To inform discussions of the future of undergraduate education in the United States, and the role of financial aid within it, this paper provides an overview of undergraduate financial aid—its motivations, its moving parts, and its controversies. Section 2 summarizes the fundamental motivations for providing financial aid. While the social value of financial aid may be taken for granted among those working within higher education, it is not always obvious to policy-makers who are trying to balance budgets in an era of fiscal constraint. Thus, a succinct review of the rationale for student aid can be helpful to have on hand. The heart of the paper, Section 3, provides an overview of undergraduate financial aid: who provides what, how, and to whom. Section 4 discusses several hot-button issues in contemporary financial aid policy, highlighting key sources of debate and incorporating research evidence where available. Section 5 concludes.
This paper was published by the American Academy of Arts & Sciences.