In a discussion of the crisis in graduate education in the sciences and engineering, focus is on factors that threaten American capability to produce world-class science in universities. While finances play a part, the causes are basically structural--the rigidity of university faculties, stemming from a significant expansion in tenured positions, and the scarcity of new faculty positions for younger doctoral scientists and engineers. After a rapid growth in universities, due to the post-war baby boom and a growing affluence, federal support declined from 42 percent in 1967 to 23 percent in 1975. Meanwhile cost inflation eroded the value of the dollar, austerity budgets were implemented, and sciences and engineering felt the squeeze. More recently the federal government has increased its basic research fundings (up about 8 percent in 1972 constant dollars). College enrollment is expected to peak in 1980, with about 7.4 million degree students enrolled in colleges and universities; however students enrolled in sciences and engineering are down 12 percent from 1973. It is suggested that the problem of tenured faculty might be met by a government incentive program for faculty who decide to embark on a second career well before retirement age. Other solutions are grants that would free university money to hire young faculty members or the creation of research institutes funded by industry, with tax incentives. (PHR)