The U.S. General Accounting Office surveyed 758 higher education institutions (of which 430 responded) to determine how much federal student financial aid is going towards payment for remedial courses courses needed by new college students to attain adequate proficiency in basic skills prior to taking college level courses. In addition, nine schools (three public 2-year schools; 3 private and 3 public 4-year schools) were chosen as case studies to examine how and why schools provide remedial education and to profile students taking these courses. The results indicated that of all financial aid awarded to underclassmen, approximately 13 percent went to freshmen and sophomores enrolled in at least one remedial course; that only 6 percent of freshmen and sophomores both received financial aid and were enrolled in remedial courses; and that approximately 4 percent of the financial aid granted to freshmen and sophomores paid for remedial courses. Most of the case study schools had formal programs for students in need of remedial education. Mandatory placement tests triggered placement in remedial programs in most instances. Generally, freshmen and racial minority students constituted a higher share of remedial course enrollments compared with their campus wide enrollments. Appendices provide additional detail on: (1) the questionnaire scope and methodology; and (2) all nine case study schools. (DM)