The Postsecondary Education Commission is currently examining the question of affordability at California's colleges and universities. It is a pivotal issue that is being debated both within and outside the higher education community. Clearly, the ability of students and families to finance a higher education is becoming a critical issue. This report addresses the "affordability crisis" in California higher education today. It served as a background piece for panel discussions that were held at the Commission's June 27, 2006, meeting. In a recent paper prepared for the National Commission on the Future of Higher Education, the Public Policy Institute for Higher Education identified four major policy concerns surrounding higher education: (1) Student Affordability; (2) Institutional Cost Control; (3) State and National Capacity; and (4) Public Credibility. This report is divided into the following sections: (1) Background; (2) The Commission's Principles; (3) The Role of Need-Based Grant Aid; (4) The Dynamics of Debt; (5) What Are the Major Risk Factors in Education Debt?; and (6) The Affordability Panel. Appended are: (1) Development of a New Commission Policy on Higher Education Affordability: A Set of Principles; and (2) Detailed cost information on all of the California public university campuses.