content: SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
    
                                    FORM 8-K
    
                                 CURRENT REPORT
    
  
  
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
        Date of Report (Date of earliest event reported): November 9, 1998
   
                  TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                  -------------------------------------------
               (Exact Name of Registrant as Specified in Charter)
  
  
         Delaware                    0-20303            13-2846796
      ----------------            ------------    -----------------------
  State or Other Jurisdiction     (Commission       (I.R.S. Employer
      of Incorporation)           File Number)     Identification No.)
  
  
  P.O. Box 382, 4 Hardscrabble Heights, Brewster, New York     10509
  --------------------------------------------------------    -------
  (Address of Principal Executive Offices)                    Zip Code
   
  
   Registrant's telephone number, including area code: (914) 277-8100
                                                       --------------
  
  
          P.O. Box 382, Fields Lane, Brewster, New York 10509
        -------------------------------------------------------
      Former name or former address, if changed since last report
  
  
  
  <PAGE>
  
  Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
  
       Acquisition of Assets of Mildred Elley Schools.
       -----------------------------------------------
  
       On November 9, 1998 (the "Closing Date"), Touchstone Applied
  Science Associates, Inc. (the "Company"), through MESI Acquisition
  Corp. ("MESI"), a wholly-owned subsidiary of TASA Educational
  Services Corporation, which is a wholly-owned subsidiary of
  the Company, purchased substantially all of the assets (the
  "Assets") of Mildred Elley School, Inc. (the "Seller") (the
  "Acquisition") as of November 2, 1998. The Assets of the Seller
  include:(i) cash on hand, (ii) accounts and accounts
  receivable,(iii) prepaid expenses, (iv) furniture and
  fixtures, machinery and equipment, and inventory in all forms,
  (v) catalogs, (vi) student records and lists, and mailing
  lists, (vii) leases, (viii) curriculum, (ix) all intellectual
  property and proprietary rights and interests, (x) any and all
  contracts and contract rights and (xi) the names of Seller,
  including "Mildred Elley School, Inc.", "Mildred Elley Business
  School" and all variations and derivatives thereof. The
  Asset Purchase Agreement underlying the Acquisition also
  contains a restrictive covenant which, among other things,
  restricts the Seller's involvement in the ownership,
  management, development and operation of post-secondary
  schools for a period of two years after the Closing Date.
  
       The purchase price for the Assets was $3,000,000,
  paid as follows: (i) $2,000,000 in cash at the closing and
  (ii) $1,000,000 by a five-year promissory note of MESI,
  payable in equal quarterly installments of principal and
  interest and bearing interest at a rate equal to 8.5%
  per annum. In addition, MESI assumed certain liabilities
  of the Seller related to the acquired business (the "Assumed
  Liabilities"). The aggregate amount of the Assumed Liabilities
  is approximately $1,000,000.
   
  
       Simultaneous with the closing, MESI entered into
  employment agreements with Faith Takes, the President of the
  Seller, and three other employees of the Seller. Pursuant to
  her employment agreement, Ms. Takes will be the President and
  Chief Executive Officer of MESI and the Executive Vice President
  of TASA Educational Services, Corporation, a wholly-owned
  subsidiary of the Company and the parent company of MESI. Ms.
  Takes' employment will be for an initial term of three years
  at an annual compensation equal to $150,000 plus incentive
  compensation.
  
       Financing of the Acquisition. The Company financed
       -----------------------------
  the Acquisition through the issuance of debentures, with
  warrants attached, pursuant to a Securities Purchase Agreement
  with Cahill, Warnock Strategic Partners Fund, L.P. ("Cahill,
  Warnock") and Strategic Associates, L.P. (together with
  Cahill, Warnock, the "Purchasers"). Pursuant to the
  Securities Purchase Agreement, the Company:(i) issued and
  sold to the Purchasers 8% Debentures due 2003 (the
  "Debentures") in the aggregate principal amount of $4,000,000,
  (ii) issued and sold to the Purchasers, as additional
  consideration for purchasing the Debentures, warrants (the
  "Warrants") to acquire 2,760,918 shares of the Company's Common
  Stock, which, on the date of issuance of the Debentures,
  constituted 20% of the Company's issued and outstanding common
  stock on a fully diluted basis, after giving effect to the
  transactions contemplated in the Securities Purchase Agreement
  and (iii) authorized the issuance and sale in the future to
  the Purchasers of additional shares of the Company's Common
  Stock upon the Company's exercise of a put option, the terms
  and conditions of which are set forth in the Securities
  Purchase Agreement, which is attached as an exhibit hereto. 
  Of the Warrants issued, 80% are immediately exercisable, and
  20% will become exercisable 18 months after the issuance
  thereof if the Company shall not have repaid the Debentures in
  full by such date.
  
       Pursuant to an Investor Rights Agreement between the
  Company and the Purchasers, the Company has agreed that so
  long as the Purchasers own at least 50% of the Warrants (or if
  the Warrants have been exercised, the shares issuable pursuant
  thereto), the Purchasers shall have the right to nominate two
  directors to the Board of Directors of the Company. As of the
  date of this Report, the Purchasers have nominated David L.
  Warnock, who was elected to the Board of Directors by
  unanimous written consent of the Directors on October 28, 1998.
  Pursuant to the Investor Rights Agreement, the directors and
  executive officers have agreed, at each meeting of
  stockholders for the purpose of electing directors, to cast
  their eligible votes in favor of the nominees of the
  Purchasers. In addition, for a period of 29 months from the
  date of the closing, at each meeting of stockholders for the
  purpose of electing directors, the Purchasers have agreed to
  cast all of their eligible votes in favor of the directors
  nominated by the Company.
  
       Pursuant to a Registration Rights Agreement between
  the Company and the Purchasers,the Company has agreed to
  register with the Securities and Exchange Commission the
  shares of Common Stock underlying the Warrants.
  
  Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
          INFORMATION AND EXHIBITS.
  
          (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. 
  
  
          The audited financial statements of the business
  acquired will be filed by amendment to this Current Report
  on Form 8-K no later than the date which is sixty days
  after the date of this Current Report.
  
          (b) PRO FORMA FINANCIAL INFORMATION
  
          The PRO FORMA financial information will be filed
  by amendment to this Current Report on Form 8-K no later
  than the date which is sixty days after the date of this
  Current Report.
  
          (c) EXHIBITS
  
          Exhibit 4.1   Investor Rights Agreement, dated as of September
                        4, 1998, by and among the Company, Cahill Warnock
                        Strategic Partners Fund, L.P., Strategic Associates,
                        L.P., and the Individual Shareholders Named Therein
  
          Exhibit 4.2   Registration Rights Agreement
  
          Exhibit 4.3   Form of 8% Subordinated Debenture
  
          Exhibit 4.4   Form of Warrant
  
          Exhibit 10.1  Asset Purchase Agreement, dated as of November 2, 1998,
                        between Mildred Elley School, Inc. and MESI Acquisition
                        Corp.
  
          Exhibit 10.2  Promissory Note of MESI Acquisition Corp.
  
          Exhibit 10.3  Guaranty of TASA with respect to Promissory Note of
                        MESI Acquisition Corp.
  
          Exhibit 10.4  Employment Agreement, dated as of November 2, 1998,
                        between Mildred Elley School, Inc. and Faith Takes
  
          Exhibit 10.5  Securities Purchase Agreement, dated as of September
                        4, 1998, by and among the Company, Cahill Warnock
                        Strategic Partners Fund, L.P., and Strategic Associates,
                        L.P.
   
  <PAGE>
  
  
                                     SIGNATURE
  
  
          Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
  
                          TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC. 
  
  
  
  
                          By:/s/ ANDREW L. SIMON 
                             -----------------------------------------
                             Andrew L. Simon
                             President 
  
  
  Date: November 23, 1998
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text: SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
    
                                    FORM 8-K
    
                                 CURRENT REPORT
    
  
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
        Date of Report (Date of earliest event reported): November 9, 1998
   
                  TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                  -------------------------------------------
               (Exact Name of Registrant as Specified in Charter)
  
         Delaware                    0-20303            13-2846796
      ----------------            ------------    -----------------------
  State or Other Jurisdiction     (Commission       (I.R.S. Employer
      of Incorporation)           File Number)     Identification No.)
  
  P.O. Box 382, 4 Hardscrabble Heights, Brewster, New York     10509
  --------------------------------------------------------    -------
  (Address of Principal Executive Offices)                    Zip Code
   
  
   Registrant's telephone number, including area code: (914) 277-8100
                                                       --------------
  
          P.O. Box 382, Fields Lane, Brewster, New York 10509
        -------------------------------------------------------
      Former name or former address, if changed since last report
  Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
  
       Acquisition of Assets of Mildred Elley Schools.
       -----------------------------------------------
  
       On November 9, 1998 (the "Closing Date"), Touchstone Applied
  Science Associates, Inc. (the "Company"), through MESI Acquisition
  Corp. ("MESI"), a wholly-owned subsidiary of TASA Educational
  Services Corporation, which is a wholly-owned subsidiary of
  the Company, purchased substantially all of the assets (the
  "Assets") of Mildred Elley School, Inc. (the "Seller") (the
  "Acquisition") as of November 2, 1998. The Assets of the Seller
  include:(i) cash on hand, (ii) accounts and accounts
  receivable,(iii) prepaid expenses, (iv) furniture and
  fixtures, machinery and equipment, and inventory in all forms,
  (v) catalogs, (vi) student records and lists, and mailing
  lists, (vii) leases, (viii) curriculum, (ix) all intellectual
  property and proprietary rights and interests, (x) any and all
  contracts and contract rights and (xi) the names of Seller,
  including "Mildred Elley School, Inc.", "Mildred Elley Business
  School" and all variations and derivatives thereof. The
  Asset Purchase Agreement underlying the Acquisition also
  contains a restrictive covenant which, among other things,
  restricts the Seller's involvement in the ownership,
  management, development and operation of post-secondary
  schools for a period of two years after the Closing Date.
  
       The purchase price for the Assets was $3,000,000,
  paid as follows: (i) $2,000,000 in cash at the closing and
  (ii) $1,000,000 by a five-year promissory note of MESI,
  payable in equal quarterly installments of principal and
  interest and bearing interest at a rate equal to 8.5%
  per annum. In addition, MESI assumed certain liabilities
  of the Seller related to the acquired business (the "Assumed
  Liabilities"). The aggregate amount of the Assumed Liabilities
  is approximately $1,000,000.
   
  
       Simultaneous with the closing, MESI entered into
  employment agreements with Faith Takes, the President of the
  Seller, and three other employees of the Seller. Pursuant to
  her employment agreement, Ms. Takes will be the President and
  Chief Executive Officer of MESI and the Executive Vice President
  of TASA Educational Services, Corporation, a wholly-owned
  subsidiary of the Company and the parent company of MESI. Ms.
  Takes' employment will be for an initial term of three years
  at an annual compensation equal to $150,000 plus incentive
  compensation.
  
       Financing of the Acquisition. The Company financed
       -----------------------------
  the Acquisition through the issuance of debentures, with
  warrants attached, pursuant to a Securities Purchase Agreement
  with Cahill, Warnock Strategic Partners Fund, L.P. ("Cahill,
  Warnock") and Strategic Associates, L.P. (together with
  Cahill, Warnock, the "Purchasers"). Pursuant to the
  Securities Purchase Agreement, the Company:(i) issued and
  sold to the Purchasers 8% Debentures due 2003 (the
  "Debentures") in the aggregate principal amount of $4,000,000,
  (ii) issued and sold to the Purchasers, as additional
  consideration for purchasing the Debentures, warrants (the
  "Warrants") to acquire 2,760,918 shares of the Company's Common
  Stock, which, on the date of issuance of the Debentures,
  constituted 20% of the Company's issued and outstanding common
  stock on a fully diluted basis, after giving effect to the
  transactions contemplated in the Securities Purchase Agreement
  and (iii) authorized the issuance and sale in the future to
  the Purchasers of additional shares of the Company's Common
  Stock upon the Company's exercise of a put option, the terms
  and conditions of which are set forth in the Securities
  Purchase Agreement, which is attached as an exhibit hereto. 
  Of the Warrants issued, 80% are immediately exercisable, and
  20% will become exercisable 18 months after the issuance
  thereof if the Company shall not have repaid the Debentures in
  full by such date.
  
       Pursuant to an Investor Rights Agreement between the
  Company and the Purchasers, the Company has agreed that so
  long as the Purchasers own at least 50% of the Warrants (or if
  the Warrants have been exercised, the shares issuable pursuant
  thereto), the Purchasers shall have the right to nominate two
  directors to the Board of Directors of the Company. As of the
  date of this Report, the Purchasers have nominated David L.
  Warnock, who was elected to the Board of Directors by
  unanimous written consent of the Directors on October 28, 1998.
  Pursuant to the Investor Rights Agreement, the directors and
  executive officers have agreed, at each meeting of
  stockholders for the purpose of electing directors, to cast
  their eligible votes in favor of the nominees of the
  Purchasers. In addition, for a period of 29 months from the
  date of the closing, at each meeting of stockholders for the
  purpose of electing directors, the Purchasers have agreed to
  cast all of their eligible votes in favor of the directors
  nominated by the Company.
  
       Pursuant to a Registration Rights Agreement between
  the Company and the Purchasers,the Company has agreed to
  register with the Securities and Exchange Commission the
  shares of Common Stock underlying the Warrants.
  
  Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
          INFORMATION AND EXHIBITS.
  
          (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. 
  
          The audited financial statements of the business
  acquired will be filed by amendment to this Current Report
  on Form 8-K no later than the date which is sixty days
  after the date of this Current Report.
  
          (b) PRO FORMA FINANCIAL INFORMATION
  
          The PRO FORMA financial information will be filed
  by amendment to this Current Report on Form 8-K no later
  than the date which is sixty days after the date of this
  Current Report.
  
          (c) EXHIBITS
  
          Exhibit 4.1   Investor Rights Agreement, dated as of September
                        4, 1998, by and among the Company, Cahill Warnock
                        Strategic Partners Fund, L.P., Strategic Associates,
                        L.P., and the Individual Shareholders Named Therein
  
          Exhibit 4.2   Registration Rights Agreement
  
          Exhibit 4.3   Form of 8% Subordinated Debenture
  
          Exhibit 4.4   Form of Warrant
  
          Exhibit 10.1  Asset Purchase Agreement, dated as of November 2, 1998,
                        between Mildred Elley School, Inc. and MESI Acquisition
                        Corp.
  
          Exhibit 10.2  Promissory Note of MESI Acquisition Corp.
  
          Exhibit 10.3  Guaranty of TASA with respect to Promissory Note of
                        MESI Acquisition Corp.
  
          Exhibit 10.4  Employment Agreement, dated as of November 2, 1998,
                        between Mildred Elley School, Inc. and Faith Takes
  
          Exhibit 10.5  Securities Purchase Agreement, dated as of September
                        4, 1998, by and among the Company, Cahill Warnock
                        Strategic Partners Fund, L.P., and Strategic Associates,
                        L.P.
  SIGNATURE
  
          Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
                          TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC. 
  
                          By:/s/ ANDREW L. SIMON 
                             -----------------------------------------
                             Andrew L. Simon
                             President 
  
  Date: November 23, 1998