Poverty and ignorance are the twin challenges of society, and elimination of these evils has always been the first goal of any development effort of all kinds of government. The objective of this study is to examine the relationship between education expenditure and the level of income of households. It also investigates the trend and structural shift in per capita private and government expenditure on education in India for the period 1951-2008. Intertemporal analysis of data on per capita expenditure on education (PCEXED), private and/or public, shows that there are significant structural shifts in 1972, 1985 and 1998. Results show that the elasticity of education expenditure with respect to monthly per capita expenditure is greater than one. Interclass variation in PCEXED is empirically found to be higher in both the rural and the urban areas.