This paper examines the association between education and subjective wellbeing. The evidence on this relationship is scarce, inconsistent and poorly understood, and reports of a negative association are common. Such results may appear counter-intuitive, but are in fact consistent with the idea that education is associated with higher expectations with respect to life circumstances. Consequently, education may be associated with greater subjective wellbeing only insofar as the ability to meet (or exceed) expectations is improved. This paper uses panel data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to evaluate the evidence for differences in reference points across education levels, and to determine the overall association between education and subjective wellbeing. The results of the analysis confirm moderate rightward drifts across education levels for satisfaction with life in general, which are ‘neutralised’ by observed differences in actual circumstances. Other patterns emerge within specific life domains. Positive overall associations are observed for satisfaction with financial circumstances and health, while negative overall associations are observed for satisfaction with work and the amount of leisure time.