The planning relationship between the federal government and the states, and between each state and its higher education institutions are considered. The federal government's role in higher education has had three major components: regulation, support of research in universities, and support of student aid programs. Federal regulation has particularly addressed equity issues, including participation of women and minorities, and has been justified because some of the states had failed to exercise an adequate role in this area. There has not been significant state involvement in federal support for research. Federal aid to students has been designed to provide increased access for the economically disadvantaged, middle income students, and other special populations, and has been developed without much involvement of either the states or institutions. It is suggested that it is important to the states to have a relationship with the federal government in formulating and implementing policy in regard to federal support to students, research, and health manpower and education. Planning linkages between the state agency and public and private institutions are addressed. It is suggested that most colleges are not managed internally in accordance with a plan and that planning needs to be addressed to issues in addition to planning for retrenchment. Other possible directions are to increase legislative and executive branch involvement in planning in the future, provide the necessary mix of quality improvement goals and resource reallocation and efficiency goals in the plan, and use statements of goals and objectives in state plans as a basis for evaluation. (SW)