This paper is the third in a series of yearly efforts to identify the top public-policy issues facing higher education. Each of the 10 issues is discussed in terms of likely developments in 1996 and the near future, the issue's various aspects, and sources of further information on the issue. Issues identified and discussed are: (1) cost containment and productivity (Congressional hearings on college costs and tuition increases are likely in 1996); (2) affirmative action (how this controversial issue is resolved could have a major impact on hiring, promotion, and admission policies); (3) student financial aid (focus will be on funding levels of federal and state aid); (4) governance and privatization (the role of governing boards and privatization is a major issue in several states); (5) federal tax debate (proposals concerning a flat-tax, consumption-tax, and discontinuation of private institutions' tax exemptions will impact institutions); (6) economic development (more debate at the state level on higher education's role in stimulating economic development is likely); (7) federal research issues (Congress will debate federal research funding and indirect-cost recovery policies); (8) distance learning and technology (the federal telecommunications bill could have important effects in this area); (9) campus climate (deterioration in campus climate could have public policy implications; and (10) regulation and accountability (regulatory relief will continue on the federal and state levels). (DB)