Higher education in the State of Connecticut is examined in light of the problems created during a time of retrenchment. Centered on the thought that the state's educational institutions have over-expanded, this report studies the historical background and financial arrangements of Connecticut higher education and offers recommendations for dealing with the current and future financial crises. The history of Connecticut institutions is traced from 1945, noting large enrollment increases and facility expansions for both the public and private sector. The various methods higher education institutions have used to borrow money are examined including: demand loans, mortgages, federal funding, state funding, and collegiate bonds. Specific problems for the state's higher education institutions that are discussed include declining enrollments, competition between the independent and public schools, internal problems, inflation, and delayed retirement. Information on the relative solvency of the Connecticut schools and methods for handling delinquent loans are also provided. Recommendations are made for federal and institutional policies to help the schools survive the coming years. (SF)