This study, mandated by Virginia law in 1999, reviews need-based student financial aid programs. The mandate specifies that the study must review policies and implementation strategies used in other states; present alternative policies and administrative structures for need-based programs in Virginia; provide alternatives for a simplified, equitable, need-based financial aid program for students and parents; and examine merit and incentive scholarship plans and make recommendations regarding their application in Virginia. Following the introduction, which examines need- need-based aid in Virginia, separate chapters examine the current state financial aid system, including eligibility criteria, institutional award schedules, and government oversight regulations; assess alternatives for need-based financial aid; and review merit and incentive scholarship programs and their application in Virginia. The study found that the state could improve administration of its programs by better articulating policy; monitoring the awarding of state grants to eligible students; identifying students who did not receive the aid for which they were eligible; and calculating the amount needed to fully fund grants to eligible students. Five appendixes include the study mandate, and present data on financial aid by institution; other need-based programs; need-based processes in other states; states' funding of programs; and state agency responses to the study findings. (RH)