An attempt is made to explain the intricacies of British higher education finance in language that is meaningful to an American audience. After a brief description of the bases of the British system, the following issues that have been subject to recent public debates in Britain are considered: (1) the finance of Oxford and Cambridge; (2) the independent university; (3) the open university; (4) grants versus loans; (5) fees for foreign students; (6) the pool for public sector funding; and (7) the financing of student unions. The autonomous sector of British higher education, consisting of 47 self-governing universities, receives almost 95 percent of its income from the central government in the form of a regular annual grant. The maintained sector, consisting of about 800 publicly-owned institutions administered by local governments, is financed by local authorities, which in turn receive two-thirds of their income from the central government. It is suggested that high costs at Cambridge and Oxford are associated with the collegiate system, or federation of some 30 colleges, and the associated emphasis on teaching by small tutorials. (SW)