Although the 1816 constitution recommended establishment of public schools, the state legislature did not provide funds for education. The constitution of 1851 more specifically outlined the state's responsibility to support a system of free public schools. Development was rapid following passage of this document; more than 2,700 schoolhouses were built in the state from 1852 to 1857, and an adult literacy rate of nearly 90% was achieved by 1860. The illiteracy rate was reduced to 5.2% for the adult population in 1900, to 1.7% in 1950, and to only 0.7% in 1970, when Indiana ranked 14th among the 50 states. In 2000, 82.1% of those aged 25 years and over were high school graduates, and 19.4% had completed four or more years of college.

The total enrollment for fall 1999 in Indiana's public schools stood at 988,702. Of these, 699,221 attended schools from kindergarten through grade eight, and 289,481 attended high school. Minority students made up approximately 17% of the total enrollment in public elementary and secondary schools in 2001. Total enrollment was estimated at 988,963 in fall 2000 and expected to reach 1,029,000 by fall 2005. In 1999/2000, Indiana spent nearly $6.6 billion on public schools, for an average expenditure of $6,658 per student. Expenditures for public education in 2000/01 were estimated at $7,668,000. Enrollment in nonpublic schools in fall 2001 was 105,533.

As of fall 2000, there were 352,687 students enrolled in college or graduate school. In the same year Indiana had 98 degree-granting institutions. In 1997, minority students comprised 11.5% of total postsecondary enrollment. Indiana University, the state's largest institution of higher education, was founded in 1820. It is one of the largest state universities in the US, with a total of nine campuses. The Bloomington campus has a nationally recognized music program. Other major state universities include Purdue University (Lafayette), Ball State University (Muncie), and Indiana State University (Terre Haute). Well-known private universities in the state include Notre Dame (at South Bend) and Butler (Indianapolis). Small private colleges and universities include DePauw (Greencastle), Earlham (Richmond), Hanover (Hanover), and Wabash (Crawfordsville).