The task of designing future postsecondary education policy in fiscal year 1981 is discussed in relation to two unique conditions. First, the federal role as a provider of student assistance was increased dramatically in 1978 by passage of the Middle Income Student Assistance Act, and the full costs of implementing MISAA are coming due. Second, the Congress faces increasing pressure, both internally and externally, to reduce federal spending. The tradeoffs are discussed: federal benefits can continue to be distributed broadly to postsecondary students, resulting in substantially increased federal expenditures, or funding can be reduced. Under current law, the reduction would affect lower- and moderate-income students more than others. New legislation could target federal assistance more directly on the most needy students, so that cost reductions would be borne more by middle-income students and their families. Data charts illustrate detailed examinations of the options at issue. Chapters focus on: the purpose and impact of federal postsecondary education policy; reauthorization and funding of federal grants to students; reauthorization of student loans; efforts to remove nonfinancial impediments to equal educational opportunity; and overall budget implications of future federal policy for student assistance. (Author/MSE)