This report presents the results of a 2-year study of the fiscal condition of higher education in the United States. The study found that at a time when the level of education needed for productive employment is increasing, college costs and demand are rising much faster than funding. Unless sweeping changes are made to control costs, millions of Americans will be denied the opportunity to go to college, further exacerbating growing wage disparities between rich and poor and threatening the economic and social stability of the nation. Until now, institutions have covered rising costs by sharp tuition increases; however, such increases will shortly begin to keep Americans from pursuing higher education. And if future tuition increases are capped at the rate of inflation, colleges and universities will face a massive shortfall of resources by 2015. The report recommends that (1) political leaders reallocate public resources to reflect the growing importance of higher education; (2) institutions improve performance-based assessment, faculty productivity, and internal accountability; (3) institutions pursue greater mission differentiation; (4) institutions develop sharing arrangements to improve productivity; and (5) that all citizens be encouraged to pursue some form of postsecondary education. (MDM)