This report analyzes some effects of the ways in which some $132 million in state and local taxes will be spent on Oregon higher education. These effects are evaluated in the light of some socioeconomic objectives. Discussed are: (1) the important components in state subsidies for higher education--institutional subsidies, need grants, scholarship grants, and educational loans; (2) the relative effectiveness of the different types of state subsidies and suggested shifts of funds among them that could produce superior results; (3) alternative mix of subsidies that could be implemented successfully in Oregon; and (4) the means and ends in state subsidies to postsecondary education. In conclusion, it is found that if the interaction between the demands for educational services and the supply were more realistic--in a system that was more akin to the marketplace, with consumers more at liberty to direct their demand to any product they prefrred--greater flexibility and economy would result. Increased competion among alternative institutions could lead to greater responsiveness, an increase in educational quality, and lower costs. (Author/KE)