The information system of the American Council on Education (ACE), which comprises the basis for the ACE Higher Education Data Bank, is designed to collect and maintain biographical and other data on approximately 300,000 college freshmen each year for continuing longitudinal research based on subsamples of the students. The need for confidential processing of these data has stimulated increasing concern among psychologists, sociologists, statisticians, administrators, and educational researchers. This study was implemented in order to set forth some limitations and problems involved with this kind of research. The report examines some specific aspects of the privacy issue with respect to ACE's information system, and the major differences and similarities between the ACE Data Bank and other data bank systems. A major emphasis is placed on evaluating devices that would help to preserve the confidentiality of data at each level of the system: data collection, transmission, and analysis dissemination. The report also discusses current administrative and ethical regulations, and computer devices that could protect researchers and the privacy of students in the event of possible harassment or liabilities caused by legal agencies. (WM)