Forces that will greatly affect higher education in the 1980s are described, and trends during the 1970s are briefly reviewed, with an emphasis on educational finance. During the 1970s, the number of students increased by 24.3 percent, total educational and general revenues more than doubled, the state's proportion of these revenues rose by 5.2 percent, and the federal share fell by 6.1 percent. As a whole, the higher education institutions held their own throughout most of the 1970s. Two possible scenarios for the 1980s (pessimistic and optimistic) are considered concerning enrollments, curriculum and quality, personnel, relations with government, and the private colleges. It is argued that the ability of institutions to overcome key challenges will be the critical factor in determining which scenario prevails. The following challenges posed by the American economy and society are addressed: demographics, economics, reindustrialization, and competition for students from business and industry. Additionally, the relationship between higher education and governments is discussed with respect to state-level formulas, demands for increasing accountability, and competition in the budget process. (SW)