SummaryCurrent Government education policy presents some stark contrasts. While subsidies to secondary students are being increased significantly by an expansion of secondary allowances, individual subsidies at the tertiary level are to be reduced via a system of fees or taxes. This policy development is substantially predicated upon the Government's belief that higher education students tend to come from privileged backgrounds. This study explores that hypothesis by analysing the influence of family background on the transition of Year 12 school‐leavers to further education or the labour‐force.Excellent data from the Australian Longitudinal Survey are used to focus on some previously under‐researched aspects of this question. Six models axe reported, each offering different trade‐offs between the competing needs for comprehensive coverage of explanatory variables and data coverage.The strongest result obtained is the consistent significance of the mother's educational qualifications in the child's decision to proceed to further education. Equally interesting is the insignificance of the father's educational level. The paternal variables which influence tertiary outcomes are income and/or occupation. Attendance at a private non‐Catholic school is also influential.The paper reports provocative evidence on the outcomes of the children of non‐English speaking migrants. While this group is often perceived as educationally disadvantaged by their parents' ethnic origins, the results of this study indicate that they are more likely to proceed to tertiary studies than are the children of English speakers.Part‐time employment of school children is an increasingly common phenomenon. The preliminary evidence here indicates that the children involved subsequently have lower representation in tertiary institutions but higher employment probabilities in the labour‐force.The results imply that mothers and fathers play different roles in influencing their children's outcomes. But there is often a high degree of correlation between maternal and paternal characteristics which makes it difficult to identify separately their respective influences.In summary, the results suggest that family background matters. But the implications for public policy which aims at redressing imbalances in society are complex. On the one hand the children of the well educated and from private schools are more likely to attend tertiary institutions. On the other hand, the migrant “success” story suggests that motivated individuals have it within their grasp to determine their educational and work outcomes. Together, the results point to the importance of attitudes in determining participation in tertiary education and suggest that attention to this factor could enhance the effects of educational subsidies provided to