A challenge facing the new South African governmentis 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 re- turns are sufficiently high to these forms of increased education, it is expected that stu- dents and their families will compete for these services. Consequently, we start by reviewing ordi- nary least-squares (OLS) estimates, based on a 1993 household survey of South Africa, of the private mean wage returnson education of men within four racial groups:African (black) (75 percent), colored (mixed race) (8 per- cent), Indian (3 percent), and white (14 per- cent).' We then examine how the previous government's rationing of education to Afri- cans may distort estimated returns and affect their future levels as the supply of educated Africans increases.