The paper is a concise presentation of the author's analytic report for The Heritage of Eurasia foundation published in 2004. The author argues in favor of the necessity to abolish the outdated concept that higher education is enough to train specialists. In the modern world it should be re-oriented towards developing abilities that would allow the student to acquire new skills through practice and further supplementary education. The main suggestions for improving the system of higher education are the following: education by lecturing has become irrelevant; faculty exchange should become standard in institutions of higher education, classes are efficient only if graduate students take part in the teaching; a modern university can not exist without developing its research and experimental facilities; universities can be strengthened by solving the problems of cities and regions; systems for methodological control cen be developed and implemented in universities once they achieve independence.