This study analyzed data from the National Postsecondary Student Aid Study (NPSAS) to examine the awarding of institutional need-based versus non-need-based grants to undergraduate students. The purpose of the study was to determine how the use of these different types of scholarships has changed from 1989 to 1995, the socioeconomic characteristics of students receiving them, and how institutional and student characteristics help predict those who will receive them. Overall, institutional financial aid increased 111% during this period. The increase in grant awards also outpaced tuition increases during this period. With regard to non-need grants, there was a decrease in the number of grants, but a large increase in the mean grant amount. Institutions appeared to be concentrating larger non-need grants among fewer students. A table summarizes the complex relationships among factors that help determine who is awarded financial aid, showing the key predictors associated with increased and decreased likelihoods of receiving a grant. One key finding is that grade point average (GPA) is associated with the awarding of both need and non-need grants. Merit, as least as measured by GPA, appears to play an important role in the awarding of need-based aid as well as non-need-based aid. Race was also an important factor that differed by type of institution and region of the country. Results indicate that African Americans in both 1989 and 1995 were targeted for financial awards relative to White students, with the advantage decreasing three percentage points between the two years. (Contains 9 tables, 10 endnotes, and 19 references.) (SLD)