American higher education, according to the authors, is facing a financial crisis that can be alleviated only by drastic, increased federal support to the educational system. Presented in this document is a review of the financial history of American colleges and universities, a look at the present situation, and a preview of the future picture of higher education. Following the past, present, and future review is a discussion of whether a federal role in financing is implied, how much aid should be appropriated, and what form this aid should take. It is suggested that the federal government adopt a financial aid program that would combine institutional and student aid. An institutional grant and student loan program is offered as one major alternative. (HS)