Academic institutions, with few exceptions face financial problems and constraints. Mostly Public sector schools face financial constraints due to the high burden of students in crowed institutions where facilities for students are minimal. If financially possible, parents utilize the services of private institutions to help their children get better education. Alternatively, parents may employ external/private tuition or coaching to enhance their children’s competence because, as mentioned, most state schools are overcrowded with high student’s numbers per class which prohibits adequate student – teacher interaction. In Khyber Agency, the average income of parents prevents most families from seeking to enroll their children into the higher standard and more competitive institutions or opt for external tuition and coaching. It is generally acknowledged that the education department as a whole is the most badly administered governmental sector in Pakistan in spite of the fact that education plays such a vital role in the development of any country. As mentioned earlier, the national government has never allotted the necessary resources to this department, resulting in a poor literacy rate country-wide. A structured system for funding education is necessary based on local community needs and subject to audit control at regional level.