Introduction: Lack of access to certain minimum level of welfare that is referred to poverty is a global phenomenon and is considered as a major challenge in Iran. Understanding the determinants and the size of poverty are considered as important issues both in policymaking and academic courses. Although poverty elimination has been stressed in all Iranian socio-economic plans, Poverty still is a major challenge in Iran. Poverty eradication requires identifying the determinants of poverty and whiles some scholars such as Sen, Schultz and Becker suggest Human investment as an Effective anti-poverty policy. In this paper attempt has been made to assess the effects of education on the poverty in rural and urban areas of Iran.

  Method: In this paper a descriptive - explanatory method is used to quantify the effects of education on poverty. By using data from the Statistical center of Iran's "The Households income and expenditure survey", we first estimate the poverty line both in urban and rural areas and then distinguish the poor from non-poor families. In the next phase is a probit model to evaluate the effects of education on different aspects of poverty.

  Findings: The Results of this paper have indicated that the effect of the educational level on different aspects of poverty (income, housing and health) is significant in urban and rural areas so that if the educational level and ratio of income earners of the households increase, probability their income poverty, housing poverty, and health poverty would decline. Meanwhile, the results show that if breadwinner is a woman, the probability of being poor is more than if breadwinner is a man.

  Conclusion: Findings of this paper appear to comply with view of some scholars such as Schultz and Becker (Human capital theory). In fact education expenditure as an investment in human capital would improve the behavior, quality of decision, and living condition of Iranian households. In fact, that education mitigates the extent of poverty and since It is a merit service with positive externality, Increasing the extension of education in Iranian Government budget is suggested.