In this article, the author discusses the shift from "scholarships" to "financial aid" which was initiated by the federal government during World War II. On June 22, 1944, President Franklin D. Roosevelt signed The Servicemen's Readjustment Act of 1944--commonly known as the G.I. Bill of Rights--one provision of which gave veterans financial resources to attend college. This provision was an expression of public gratitude, not a congressional attempt to change the basis for admitting students to college. However, the bill also laid the groundwork for extending financial aid for reasons other than merit, something that has expanded to the point where billions of taxpayer dollars now go to students who lack academic promise and are vastly underprepared for any kind of college work. Federal financial aid to students is a mixture of two kinds of subsidies: (1) grants; and (2) loans. The author discusses the two kinds of subsidies and reports unintended consequences of each subsidy. (Contains 19 footnotes.)