This study looks at the impact of latent individual ability on educational attainment, specifically the decision to acquire tertiary education. The analysis aims to determine whether ability is significant over and above socio-economic status in determining educational attainment. The Cape Area Panel Study (CAPS) (2002-2005) and the School Register of Needs Survey (2000) provide data at the individual, household and school level, which are used to model the decision to apply for tertiary education for a sample of respondents who have completed matric. The CAPS data-set provides a set of literacy and numeracy test scores, which are regarded as measures of manifest ability. After purging out the effects of age, education level, as well as household and schoollevel characteristics from these test scores, a latent measure of ability is obtained, which is relatively independent of socio-economic status.