From my nephew in seminary, translating the Greek: "I did my study of the Greek of Ephesians 2. It's quite interesting. I'll try to explain it as best as I can. Make sure that you have Ephesians 2 open while you read this. It will help. The demonstrative pronoun ("that") in Ephesians 2:8 actually has a neuter gender in Greek. In Greek, pronouns must match with their antecedents in gender (masculine, feminine, neuter) and number (singular, plural). Both words "grace" and 'faith' are feminine in Greek, so it is rather impossible to say that the 'that' is pointing to either of them specifically. Rather, often times in Greek when a writer wants to refer to a whole idea he will use the neuter gender. So the antecedent of the demonstrative pronoun 'that' in this passage is actually pointing to the whole idea 'For by grace are you saved through faith.' "
"I brought this up with one of my Greek professors and pointed out that we probably should not use this passage to point to exclusively as faith as being the gift. He agreed with me. But notice that this does not disregard our faith as a gift of God. By using the 'that' to point to the whole idea that "by grace are we saved through faith" Paul is saying more. Our whole status of being children of God is "not of ourselves, it is a gift of God, not of works."