The cost of education to a country consists of total public education expenditures, total direct private cost, and total indirect private cost measured in terms of foregone earnings; improperly estimated educational costs focus only on government education expenditures. Considerable progress has been made in conceptual understanding of educational costs in the past 2 decades. Factors that determine the total amount of resources devoted to education and factors that determine expenditures within education influence educational costs. With current tight budgetary constraints and unmet demand for education in developing countries, the need to control costs and to improve efficiency is very pressing. An awareness of the disparities between educational costs in different localities is necessary for decisionmakers to design proper policies applicable to diverse settings. Applications of cost-benefit and cost-effective analyses address directly the concern regarding inefficiency in education; however, analyses of education in developing countries are often plagued by unreliable and incomplete data. For educational policymaking and planning, data on educational costs, quantities, prices, and norms, as well as socioeconomic data, are required. The obvious cost of managing a database of educational costs is likely to be more than compensated for by the gain of better-informed decisions. (132 references) (KM)