This dissertation uses Schneider and Ingram’s Social Construction and Policy Design Theory (SCT) to help understand movements in funding for higher education at the state-level over the past 25 years. SCT argues that social constructions - the symbols, images, and stereotypes used to label social groups as desirable or undesirable - and power - the voting prowess, wealth, and ability to mobilize for action - converge to predict the distribution of benefits and burdens for policy targets. In my first article, I conduct a descriptive analysis of the changes in spending on state-level grant aid for higher education, using SCT to guide expectations on how funding will be distributed. My second article uses SCT to construct and test hypotheses on state-level decisions regarding need and merit- based financial aid, showing that states with more negative social constructions of low-income and minority students allocate fewer dollars to need-based aid. Finally, my third article uses SCT to explain the adoption of state-level merit-aid financial aid policies over the last two decades. Overall, my dissertation is one of the first studies to use SCT for studying state higher education policy, and provides a confirmatory test of SCT within a new policy domain.