Some of the hidden costs to higher education are examined through a look at a high budget item: student financial aid. It has been noted in the past that among institutions operating at a deficit there was a distinct correlation between the size of the annual deficit and the institutions' appropriations for student aid. There is a philosophical concern in this cost formula that results from government intervention. Implications of this intervention are discussed. There is evidence that some institutions have become careless in their administration of federally-sponsored student aid programs, especially in collections, and all institutions are beginning to suffer. It is suggested that the regulations surrounding the administration of student aid programs not only have resulted in administrative reference that destroys diversity, but also have affected other areas of the postsecondary academic experience. Consideration is given to the effect of impoundments, accreditation powers, and court decisions influencing higher education. (LBH)