The events and legislation that have led to the present federal policy toward higher education are traced. The ongoing federal policy is shown to reflect the instability of a constantly changing political environment and a lack of consensus on the part of the political figures. The federal government has, within the last two decades, considerably increased its impact on higher education as a result of unprecedented funding. That funding has been largely the result of an increasingly broader definition of what the public welfare and the national defense might encompass, and what higher education might provide for welfare and defense. (A five-page bibliography is included.) (Author/LBH)