International critics view American institutions and policies under a microscope. Despite widespread criticism of the U.S., one thing experts tend to agree on is that American higher education is the best in the world. The European Commission published a study in January ranking the world's best universities. Of the top 50, 35 are American.

But that dominance of quality higher education may be precarious. Our public investment in public higher education is decreasing, and some states are trying to cover the losses by raising tuition.

Historically, the United States has invested heavily in higher education, devoting about 7 percent of gross domestic product to its support. Support has been strong not because we spend more per student but because so many Americans attend college. Our students understand that a college degree can enhance lifetime earning power up to an estimated $1 million.

The strength of American higher education comes from a synergy of federal, state and private support. A recently published ranking of the world's universities puts private U.S. schools (Harvard, Stanford, Cal Tech) in the top three positions. But 18 of the top 50 in the world are American public institutions, including seven from the California system and the University of Colorado at Boulder (No. 31 among all institutions, 11th among public universities).

Although public higher education is funded primarily by the states, federal aid to students, tax deductions for tuition and federal funding of research also benefit both public and private universities. And, the quality of public institutions depends increasingly on private support, particularly for "extras" and scholarships, although market downturns have reduced the value of endowments and donor generosity.

Last year, half the states cut funding to universities, according to the State Higher Education Executive Officers organization. Colorado led the nation with a 26 percent reduction, while Oklahoma, South Carolina and Wisconsin suffered cuts of about 10 percent. Reaction to higher education budget cuts has included reducing costs by eliminating classes, increasing class sizes, cutting programs and eliminating faculty and staff.

But American greatness in higher education rests on more than spending. The Economist magazine recently indicted universities in England and Europe as mostly "government-owned degree mills." America's recipe for greatness, the article said, includes diversity, competitiveness, selectivity and flexibility in setting tuition.

By having diverse choices ranging from community colleges to flagship research universities, students of varying abilities and means have wide access to education in our country. And the best students can move among diverse types of colleges and universities.

Competition reigns throughout the American system - in rigorous student admissions, brutal tenure processes, recruitment of top professors, private fundraising and creative program enhancement to meet student demands. In Europe, on the other hand, mediocrity is ensured by government supervision of "performance."

Unlike most European countries, where anyone who passes an exam is entitled to attend any school, universities here select students who meet standards they set and whose aptitudes and interests best fit the programs.

Costs of attending colleges and universities vary in the United States, where institutions set their own tuition. The Economist argues that this allows costly curricula and high-demand fields like engineering, medicine and law to pay their way without hurting other fields or quality.

In contrast, European governments effectively impose price controls. The benefits of allowing the market to work, as America does, include motivating students and making universities more responsive to "consumers."

Despite that advantage, Congress debated a bill that would sanction colleges that raise tuition above limits to be set by the federal government. Rep. Scott McInnis, R-Colo., was instrumental in removing this initiative from congressional consideration. He argued that to "place federal price controls on colleges and universities" could "result in negative unintended consequences." He says that a knee-jerk reaction to regulate tuition ignores the reality that "public colleges and universities have been forced to raise tuition" because of drastic state budget cuts.

Some question why tuition always seems to increase faster than inflation. The actual cost of educating students in public and private universities is much greater than tuition - usually more than twice tuition revenue. The rest comes from donations, endowments, research grants and state funding. If the contribution from those sources is static (or declining), and the entire cost of education increases at the same rate as the consumer price index, then tuition must rise at twice that rate to make up the difference.

The pricing flexibility that characterizes American higher education is linked to a system of robust financial aid. But that is changing. The Pell Institute for the Study of Opportunity in Higher Education reports that state budget cuts are falling heavily on needy students through cutbacks in financial aid. This trend puts the accessibility of American higher education in doubt.

Even without financial aid cutbacks, a significant disparity in access already exists. More than half of all students from families in the top 25 percent income bracket finish college, while only 4.5 percent of those in the bottom 25 percent get a degree. Tuition increases must be more than matched by financial aid increases if widespread college access is to survive.

Saving America's primacy in higher education will depend on doing more of what we have always done:

Maintaining or restoring public investment to ensure quality, expanding financial aid, and ensuring a variety of opportunities, from community colleges to research universities.

Allowing institutions flexibility to meet varied student demands, to charge differing levels of tuition and to operate without the bureaucratic controls that plague European universities.

Expanding private giving to both public and private universities. Even restored public funding will be unable to match rising enrollment and boost access for needy students.

Maintaining diverse funding sources, options for students and competition will keep American higher education the best in the world. Slashing public funding to historic lows, as we have done in Colorado, and threatening government regulation of tuition are bound to undermine the nation's preeminence in higher education.
--------------------------------------------------------------------------------
David H. Getches is dean of the University of Colorado School of Law.