Purpose: This study asks how American institutions of higher education defended the principles of academic freedom (or intellectual autonomy) during the 1950s, even as they became increasingly dependent on the federal government's financial support, their eligibility for which required an oath of political loyalty under the terms of the National Defense Education Act of 1958. Universities whose students or professors resisted the oath faced a dilemma of institutional governance as well as intellectual integrity during the early years of the Cold War. Design/methodology/approach: The study draws on documentary and archival sources, including the Congressional Record, the AAUP Bulletin, student pamphlets, newspapers and other publications of the US federal government, and on secondary sources. Findings: The author finds that the US federal government began to invest heavily in higher education during the 1950s, but financial support was often accompanied by political oversight. Higher education institutions and their professors struggled to reconcile a sense of responsibility for national service with a desire for academic freedom. The findings show how the federal government treated institutions of higher education and dealt with the issue of academic freedom during the Cold War. Originality/value: This study draws on a large pool of primary sources and previous research to offer new insights into an enduring ideological tension between academic freedom, public service and financial patronage.