Fundamental changes that will affect American higher education during the next 20 years are discussed with specific reference to residential colleges. It is suggested that many traditional residential colleges will have difficulty meeting the challenges of a changing society and will be forced to close their doors. The development and adoption of external degree programs, technological developments, lowered public expectations about a college education, economic factors, and social change will all affect the future of these colleges. Several examples of external degree programs (EDP) and changing patterns of college attendance throughout the history of higher education are described. Technological developments that allow students to obtain a college degree without going away to college are also described. The increase of short term career development courses and lifelong learning will also exert a major impact on higher education as well as the increasing cost of maintaining a traditional educational establishment and changes in demographics and laws in the United States. It is projected that for these and other reasons 25 percent of today's liberal arts colleges will be closed within 20 years. The most important requirement for survival is the willingness of the residential institutions to change to meet the challenges of the future. (SF)