It has long been argued that developing countries has to develop their humanâ€™ capital to' day 'rndown the necessary base fore long term economic growth. One of the most important waysrnthrough which improvement in human capital can be brought about is by extensively investingrnon the formal education. Ethiopia, as one of the least developed countries, has been laggingrnbehind in its human capital development. Enrollment has been among the lowest in the word.rnOn the other hand due to the lack of public resources to finance the expansion of educationrnthere is an increasing needs for a policy of charging user fees at secondary and higherrneducation. The purpose of this study is to investigate whether households are willing to pay forrneducation particularly in the rural areas, by using the 1994195 Ethiopian rural householdrnsurvey. I estimated the logistic demand function for education and computed the pricernelasticity and willingness to pay for reduction in travel time to school. The major findings of thisrnstudy are school prices, number of siblings, distance to school and the ratio of student tornclassroom are found to be the most important determinants of enrollment in rural Ethiopia. Inrnaddition, rural households are found not willing to pay for reduction in travel time to school.rnThis implies, therefore, that the policy of charging user fees to cover the cost of providingrnSchool services are not feasible in rural Ethiopia.