The Strengthening Developing Institutions of Higher Education Program--under Title III of the Higher Education Act of 1965--is evaluated. The program is intended to assist institutions struggling for survival and isolated from the main currents of academic life. More than 800 institutions had participated in this Office of Education (OE) program from its inception in 1966 through fiscal year 1977, and appropriations had exceeded $700 million. Many institutions could qualify for Title III grants, but most grants have been made to small institutions that serve primarily minority and low-income students. While the program has made many worthwhile services possible, the OE could not show how these services have moved the institutions closer to the main current of American higher education. After 12 years, no institutions have graduated from Title III. There are no indications that any will soon graduate, even though 120 of the institutions that received funds in 1977-78 had been in the program for at least 8 years. HEW told GAO it does not believe the law implies that institutions must achieve independence from the program. It is recommended that HEW direct the Commissioner of Education to: (1) provide Title III grantees with more specific guidelines on requirements for conducting program evaluations; and (2) design a better system for monitoring external evaluation reports. HEW responses are reported. Appended are a glossary, a list of institutions receiving grants in 1977-78, HEW comments, and a description of the Strengthening Developing Institutions Program reprinted from the "Federal Register." (Author/MSE)