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Tuition fees, though high, nowhere near cover costs. U.S. colleges need more gifts, more efficiency, still higher fees. A loan system that would make higher tuition fees possible would cause a substantial change in the economics of higher education.

Editor's Note: Every week, Fortune.com publishes favorite stories from the Fortune magazine archives. In the September 1957 issue, Fortune editor Herbert Solow explored the potential of a federal student loan system that could allow universities to increase tuition rates to support a ballooning college-going population and pay their faculty more than what he describes as "shamefully low pay" (Any of this sound familiar?). As high school students across the country make their college choices this month, many of the challenges Solow describes below still resonate, with several public university systems resorting to tuition hikes to absorb state budget cuts and student loan debt surpassing credit card debt for the first time last year, as recently reported by The New York Times. 

By Herbert Solow

FORTUNE -- The mixed U.S. system of public and private higher education must, within a decade or so, greatly expand its resources and improve its methods, or a presently muffled suggestion of broad-scale federal intervention will become a roaring demand. A commission of the influential National Education Association has affirmed that "increased federal aid seems essential." And Congress has before it a number of bills to expand Washington's role through, for example, vast programs of scholarships or student loans. President Eisenhower's Committee on Education Beyond the High School recently declared that Washington should have no permanent economic role in the system -- that is, "not yet." Federal action should be limited to the "residual," said the President's Committee. But this will be the case only if the traditional system can cope with emerging requirements. To do so, it will need a revolution in operations and financing.

Students studying at a library at Harvard University in 1957.

Requirements are prodigious and growing. Annually there is a leap in the percentage of Americans who want a higher education. Moreover, there has been the well-known birthrate explosion. Only two years ago President Nathan M. Pusey of Harvard somewhat breathlessly reported that he expected an enrollment on U.S. campuses of five million by 1970 (Fortune, September, 1955). But already so many young Americans are heading toward campus admissions offices that the estimate of 1970 enrollment now tops six million -- about double today's enrollment.

As the President's Committee puts it, the higher-education system's resources are strained, its quality is jeopardized, and its plans are so inadequate that it is "in no shape to meet the challenge" of 1970. To provide twice as much quality education and operate on the basis of the resources that now appear likely to be available in 1970, the system must sharply increase the efficiency of non-teaching operations (housekeeping, administration, etc.). With the present limited facilities for producing college teachers, it is impossible to double today's faculty of 250,000 by 1970 without a collapse of quality. So teachers will have to handle more students while maintaining teaching quality. And in any case, for what educators call "the oncoming tidal wave of students," vast increases in funds are indispensable. More