This paper discusses policy trends in American Indian higher education. Until the latter half of this century, teaching and learning diversity for American Indian students had meant assimilation into the white culture. It did not include retaining Indian value systems or beliefs, and against this background federal educational policies on Indian education were developed, funded, and prioritized. Higher education for American Indians has taken a markedly different turn since the birth of tribal colleges. In 1990, approximately 60% of American Indians enrolled in higher education attended locally controlled tribal colleges. These colleges must compete for funds with other educational programs within the Office of Indian Education Programs. Another strain on the federal Indian education budget is the dramatic increase in the number of people identifying themselves as American Indians. The real solution to creative policy formation for teaching diversity will require a commitment of federal funds. Attempts at upgrading educational quality for all Indian youth has resulted in increased numbers of American Indian teachers and administrators and a new focus on developing sensitivity to the special needs of students from diverse backgrounds. An unprecedented involvement of American Indians at all levels in the development of education policy, the continued growth of Indian college enrollment, and the potential wealth of American Indian nations in land and natural resources are all factors that can foster a new educational perspective incorporating diversity in philosophies and cultures. (SV)