Educational expansion, long a goal of many LDCs, has become a difficult policy to pursue. Growing populations, shrinking national incomes and higher marginal costs of schooling as schooling reaches more rural dwellers have caused policy makers to take a hard look at factors which influence educational demand and expansion. This paper examines the case of Peru where rural areas have yet to attain the nearly universal enrollment of urban areas. The study examines 2500 rural households to explore reasons why children do not attend school, drop out of school, and begin school at later ages. The study finds that the monetary costs of schools (fees and other costs) have a substantial influence on parental decisions regarding school attendance and continuation. Sensitivity analysis reveals that mother's education has a bearing on their children's educational participation, particularly in low-income households. Sensitivity analysis also reveals that school attendance of low income and female children are most strongly affected by simulated changes in school fees.