This paper is the seventh in a biennial series summarizing state and federal public policy issues affecting higher education. The purpose is to provide board members and other higher education officials with brief descriptions of the most important public policy issues. In one way or another, most of the public policy issues cited in this paper are affected by uncertain fiscal policies. The outcome of federal and state tax policy debates will directly affect the capacities of colleges and universities to sustain their public mission, including are: (1) homeland security; (2) affirmative action; (3) deteriorating economic and fiscal environment; (4) surging numbers of diverse students; (5) rapid tuition increases; (6) reauthorization of the Higher Education Act; (7) federal tax policy; (8) assessment and accountability; (9) scientific research; and (10) intercollegiate athletics. Each issue is defined, with both a brief summary and a more detailed discussion. (SLD)