Major public and private universities need substantial amounts of additional income to meet rapidly rising operating costs. After World War II, total educational and general expenditures in all universities went up from less than $1 billion in 1945-46 to more than $7 billion in 1963-64. Some private university operating deficits indicate that current sources of financial support are becoming increasingly inadequate. Compared with our economy-wide index of costs, which has risen at an average annual rate of 2%, instructional costs per student have increased around 8%. Some contributors to this rise include a wider variety of specialized fields, an increase in enrollments, establishment of new research pr"grams, and an increasing proportion of graduate students. Costs per student are also boosted by technological aids. Partly in response to purely intellectual developments and partly to felt national needs, universities have increased their commitments to costly fields such as non-Western studies, biochemistry and plasma physics, and interdisciplinary fields which have something to contribute to economic development. Even if universities failed to broaden their responsibilities, they would still face increasingly severe cost pressures. While federal grants have become important sources of research income, a relative decline in endowments has occurred. There is a clear public interest, however, in the wellbeing of private universities and national interest is confirmed by their inclusion in federal aid programs. (WM)