The federal policy perspective regarding private higher education and the issue of diversity is considered. Among the areas of concern is the tendency to assess the value of a college education in terms of the individual's earning power in the marketplace, rather than in terms of serving individual identity. It is suggested that independent colleges are among the best places to learn our basic moral and educational heritage as a nation. It is further suggested that increased federal regulation threatens the fundamental ideal of self-government in the states and in higher education institutions. One danger is that as state governments attend to higher education and to the public and private sectors, they will also exert too much governmental control. A positive step was taken with the reorientation of the federal role in higher education toward primary reliance upon student aid programs and support for middle income students. It is proposed that the federal legislation should be matched by efforts to expand state programs. Another major policy is the gradual replacement of restricted categorical programs with capitation grants to colleges based on general service standards. Regardless of the type of aid, it is proposed that policy should be: service to students with funding based on enrollment in a free-choice educational marketplace; intervention in the marketplace to prevent unfair competition, program duplication, and coordination to meet program needs; and containment of governmental overkill. (SW)