This background paper examines the current state of higher education finance--the scope of the higher education enterprise, challenges to its funding base, and undesirable consequences of current financing practices--and describes what is meant by a "restructuring" of higher education finance. It demonstrates that the structures and practices embodied in current higher education finance are neither meeting public needs nor supporting higher education's capacity to act in the public interest. The paper begins with data on current enrollments, revenues, expenditures, and credentials. Challenges to the financial base are noted, including diminishing public support, limitations of private resources, voluntary giving which is not expected to replace public subsidies, increasing proportions of ethnic groups that have lower college participation rates, and criticism of American higher education quality. Undesired consequences of current financing arrangements are identified, such as financing education through debt, diminished public investment which undercuts public influence, stratification of opportunity, and a growing mismatch between corporate investment and higher education's needs. Restructuring is defined as "a serious rethinking of higher education's resources, uses, and expected results." It is seen as a means to address the way in which higher education might be financed, how higher education uses the funds it receives, and what the public and policymakers expect higher education to do. (Contains 38 references.) (JDD)