Service quality has become predominant part of all advanced organization's strategic plan.rnHigher attention on service quality has resulted in increasing and profit of organizations.rnHigher education possesses all the characteristics of service industry such as intangibility,rnreliability, responsiveness, assurance and empathy. According to some scholars, thernstrategic success of a service organization depends on its ability to consistently meet orrnexceed customer service expectations. It is apparent that there is a need to measurernstudents' perceptions of service quality at the college of business and economics in BahirrnDar University. To investigate students' expectation and perceptions of service quality,rndescriptive survey study has been conducted and a study was guided by four objectives.rnThese objectives were: firstly, to identify students' expectations in terms of higherrneducational services provided; secondly, to ascertain the perceptions of students towardsrnthe service of the college of business and economics provides; thirdly, to measure the gapsrnbetween the expectations and perceptions, using the modified SERVQUAL score, andrnfourthly, to measure the score of the seven SERVQUAL dimensions. The instrument used tornassess the students' expectation and perceptions of service quality was the modifiedrnSERVQUAL questionnaire, measuring expectations and perceptions according to the sevenrnservice quality dimensions. The finding shows high reliability to all items in the modifiedrnquestionnaires. This indicated that gap scores, as produced by this scale are validrnmeasurement for overall satisfaction of undergraduate students with the delivery of servicesrnby the college of business and economics. The result also showed that the gap of allrndimension of service quality were negative (students' expectations of service qualityrnexceeded their perceptions). "Delivery" and "tangibility" were identified as the mostrncritical dimension for the college of business and economics in Bahir Dar University. Thus,rnimprovements are required across all seven dimension of service quality especiallyrn"empathy" and "delivery