America's college financial-aid system has helped millions of students obtain a postsecondary education, but the system's flaws are increasingly apparent. Growth in tuition and fees outpace available resources, particularly for students striving to rise out of poverty. Low- and middle-income students confront frightening levels of education debt. Our financial-aid system, built in a different era for a different demography and continually expanded over the years, is now inefficient, inequitable, and inadequate to address current college affordability challenges. Responsibility for these shortcomings is shared by all stakeholders in the higher education system--the federal government, state governments, institutions of higher education, and students themselves. We need to increase college completion, reduce student debt, and close the opportunity and attainment gaps that consign so many talented young Americans to lives on the margins of our society. And that will require change from everybody. The good news is such change is within our reach--without massive new expenditures. It starts with a redesign of a large portion of our financial-aid system, making it simpler, fairer, and more effective. We should consolidate federal programs, target resources, and, most important, further engage states. A large portion of the current panoply of federal support for higher education outside of the Pell Grant program--other grant, loan, and higher education tax programs--should be consolidated into state grants and delivered to needy students and colleges in ways that states deem best as long as college access, affordability, and success outcomes are met, including those related to reduced student debt and increased college completion. Appended are: (1) Estimated savings from program consolidation and targeting; (2) Potential distribution of funds across states; (3) Colleges and universities with no-loan or low-loan policies (2009-2010); and (4) Cost Estimate Methodology. (Contains 8 tables, 3 figures and 74 notes.) [For executive summary, see ED543213.]