Cornell University president emeritus Frank Rhodes chuckles recalling the incident. It was back around 1986. Ronald Reagan's acting science advisor John McTague had toured the campus and come away extremely impressed with Cornell's scientific investigations. Afterward, at a symposium attended by several hundred faculty and guests, he joked that he was going to devote the entire $67 billion-plus federal research-and-development budget solely to Cornell. That was when the Nobel laureate physicist Kenneth Wilson called out: "Not enough."

Although tongue-in-cheek, Wilson's quip was telling. For reasons that extend from rising faculty salaries to the struggle to modernize curricula and facilities, the nation's top universities have long been addicted to growth-a major factor in driving tuition rates consistently above the inflation rate. Unable to curb their habit, even in the face of flattening federal and state support, they have turned to alternative financing methods that include inking more deals with industry, licensing inventions and other novel profit-making ventures.