The Morrill Act, which granted land for higher education in each state, had been opposed by southerners on constitutional grounds and vetoed by President James Buchanan. It became law in 1862. The Morrill Act specifically directed that the endowed institutions were "to teach such branches of learning as are related to agriculture and the mechanic arts." The underlying idea was that educational institutions should support occupations in industry and the professions.

The Gilded Age gave birth to the major intellectual institution in modern American life: the university. Modeled on German universities, these institutions did not simply train undergraduates. They also provided graduate and professional training in law, medicine, engineering, and other fields.

Within these new universities, the sciences received stature equal to that of the humanities and the curriculum was flexible and unrestricted. The elective system, promoted at Cornell and Harvard from the 1860s onward, made universities more attractive to a broader range of students and expanded the skills that they acquired. Cornell promptly provided programs in civil engineering. Cornell's president, Andrew D. White, insisted that the institution prove its value by investigating social problems and training public leaders. But the new universities were also interested in knowledge for its own sake. They offered courses in areas that were not obviously practical, such as archaeology, astronomy, and Sanskrit.

By the 1890s, universities began to borrow organizations and procedures from business. University presidents delegated responsibility to subordinates known as the administration. University education was better organized numerically, with credit hours, grade points. The faculty divided into departments and divisions. Modern higher education had been born.

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