No longer is there a clear understanding and appreciation, either inside or outside the academic community, of how, by whom, and for what purposes the institutional affairs and intellectual resources of higher education are to be managed and directed. The basic governance questions that are being asked today should relate to the locus of responsibility, power, authority, and accountability for the decisions that must be made during this period of readjustment. The manner of making decisions in higher education has changed less radically over time than the number and type of actors participating in the decisionmaking process. To understand these changes certain factors must be considered: the history and evolution of internal governance, collective bargaining, federal and state governmental role and influence, federal research support and support for highly skilled manpower development, institutional support, special benefits and classes of persons, new forms of student aid for equal access of low-income and educationally disadvantaged students, governance as a social context, and public policy. Along with the academic freedom and autonomy that are essential to the goals of higher education goes responsibility for the maintenance of the public trust. A new social contract can be forged between government as agent of the public interest and institutions of higher education that hold the public trust. Individual rights and responsibilities must be guaranteed as well. Scholarship is higher education's most valuable public service. (Author/MSE)