The Dutch school system was extended to Indonesians with the most prestigious schools admitting Dutch children and those of the Indonesian upper class. A second tier of schooling was based on ethnicity with separate schools for Indonesians, Arabs, and Chinese being taught in Dutch and with a Dutch curriculum. Ordinary Indonesians were educated in Malay in Roman alphabet with "link" schools preparing bright Indonesian students for entry into the Dutch-language schools.Vocational schools and programs were set up by the Indies government to train indigenous Indonesians for specific roles in the colonial economy.

Chinese and Arabs, officially termed "foreign orientals", could not enrol in either the vocational schools or primary schools. Graduates of Dutch schools opened their own schools modelled on the Dutch school system, as did Christian missionaries, Theosophical Societies, and Indonesian cultural associations. This proliferation of schools was further boosted by new Muslim schools in the Western mould that also offered secular subjects. According to the 1930 census, 6% of Indonesians were literate, however, this figure recognised only graduates from Western schools and those who could read and write in a language in the Roman alphabet. It did not include graduates of non-Western schools or those who could read but not write Arabic, Malay or Dutch, or those who could write in non-Roman alphabets such as Batak, Javanese, Chinese, or Arabic.