Cross-country research on educational inequality presents contrasting views on the extent of educational inequality in Latin America and Sub-Saharan Africa. The differences in opinion also concern the relation between educational inequality and income inequality. This paper argues that part of the reported results are influenced by the type of inequality indicator applied. Moreover, there may be a separate effect of educational attainment and educational distribution on income inequality, which cannot be discerned properly by conventional indicators (in particular the Gini-coefficient faces this problem). A new indicator of educational distribution, which we coined the grade enrolment ratio, focuses at the distribution of students among consecutive grades in schooling, apart from average years of schooling (attainment). We find that the grade enrolment ratio outperforms the other indicators in explaining cross-country variation in income inequality and accurately assesses Latin American and Sub-Saharan African educational inequality.