A challenge facing the new South African government is how to expand and improve the educational opportunities of its population particularly those of the less-educated non-whites. One concern is that there be private demand to use efficiently any increase in school services. If, however, private wage returns are sufficiently high to these forms of increased education, it is expected that students and their families will compete for these services.Consequently, we start by reviewing ordinary least-squares (OLS) estimates, based on a 1993 household survey of South Africa, of the private mean wage returns on education of men within four racial groups: African (black)(75 percent), colored (mixed race) (8 percent), Indian (3 percent), and white (14 percent).' We then examine how the previous government's rationing of education to Africans may distort estimated returns and affect their future levels as the supply of educated Africans increases.