The US Education Secretary has set up a commission to craft a new national strategy to maintain US dominance in higher education.
Margaret Spellings, concerned that America's traditional global lead in higher education may be slipping, wants the Commission on the Future of Higher Education to study how to deal with the pressures of rising student enrolments and employers' demands for specific skills.
"We still have the finest system of higher education in the world," Ms Spellings said this week at the University of North Carolina. "But we're at a crossroads. The world is catching up."
In 1970, the Education Secretary said, US universities produced more than half the world's doctorates. But if current trends continue, that proportion will fall to 15 per cent by 2010.
Among other things, the commission will make recommendations aimed at preserving the US lead in academic research.
Meanwhile, reforms at the primary and secondary school levels mean that more students will soon be lining up to enrol in universities, while businesses are putting pressure on the schools to produce workers suited to a knowledge economy.
"It is time to examine how we can get the most out of our national investment in higher education," Ms Spellings said.
"We have a responsibility to make sure that our higher education system continues to meet our nation's needs for an educated and competitive workforce in the 21st century.
"Now is the time to have a national conversation on our goals for higher education."
The federal budget accounts for about one third of total annual investment in US higher education. In contrast, it pays for less than one tenth of annual expenditure in primary and secondary education.
The commission will release a final report next August.