As education in Taiwan tends to be "commercialized", this paper concerns the long-term changes in household expenditure on education and income inequality in Taiwan. The empirical findings are as follows: (1) The rates of return to education, for male and female, rise monotonically from 1976 to 2001. (2) The contribution of education to earnings inequality increases from 4.46% in 1976 to 19.23% in 2001.Education becomes the most important factor contributes to earnings inequality in 2001. (3) The share of educational expenditure in disposable income of the rich households is higher than the same share of the poor households before 1987. After 1987, this situation reverses. The gap between these two shares becomes larger and larger since then. (4) Disposable income is smaller than consumption in the poor households since 1981. It seems that more and more students from the poor households have to borrow to complete their education. Accordingly, this paper appeals to the educational policy for the emphasis on social justice.