This report is intended to provide current information and integrated analysis of state-level higher education policy developments. Part 1 considers state funding support in the following categories: changing rules, effects of changing rules, survival in a changing game, and the growth industry of higher education. Part 2 examines issues concerned with college costs, including the existence of an affordability crisis, internal cost factors for colleges and universities, external cost factors for colleges and universities, impact on students and the federal role, strategies for cost containment, and real issues such as who should pay for public higher education and what are the responsibilities of higher education's stakeholders regarding affordability. Part 3 examines issues related to students, including the changing American college student; challenges of change; and policy implications, such as accountability reporting and performance-based funding and budgeting. Data are presented in 20 tables and charts. A list of related Internet resources is attached. (DB)