The growth of federal influence on American higher education and the roles of state and local governments are discussed. The shift of power to a central government and precedents that over the years have established federal involvement in educational issues that are not directly enumerated in the Constitution are addressed. A decision that affirmed the right of the federal government to establish the conditions under which grants-in-aid may be made also strengthened the position of the federal government and ultimately affected in direct ways all educational institutions. One way of identifying the level of involvement of the federal government in education is in terms of the amount of the funds educational institutions derive from federal sources. Four categories of federal involvement in education are: establishing and maintaining institutions; identifying issues and influencing educational policy through advisory committees or commissions; providing categorical assistance through grants-in-aid; and influencing policy and operation through issuing specific regulations concerning eligibility for federal funds. The states differ in the degree of centralization of authority and control, and the financial support of the schools is based upon the combination of state and local suppport. (SW)