Various questions concerned with the role of the educational system in affecting the pattern of inequality of life incomes within the Federal Republic of Germany are addressed. Sections include an introduction, a discussion on the distribution of benefits and costs of education, and a discussion on the efficiency and equity of the educational system and the possibility of reform. Among the conclusions suggested by the analysis are: that participation in the educational process, particularly in higher education, is dependent on the social group into which an individual is born; that individuals do not necessarily attain higher levels of education simply because of their abilities; that the higher the level of education, the higher a person's life income tends to be; that the tax system is relatively fair as it places relatively greater burdens on those who have received a higher net subsidy via the educational process; and that the economic base of the system of education should be reformed so as to provide a better mix of market type of instruments of financing. Comments on the paper suggest that to interpret the results, the authors could have attempted an analysis of the effect of education on income by making some assumptions about the proportion of education. (Author/AM)