The "two exemptions and one subsidy" (TEOS) policy presages the coming of an era of free education in compulsory education. Actually, the agricultural and pastoral districts of China's Tibet Autonomous Region had already experienced policies of free compulsory education in the mid-1980s, that is, the "three guarantees" ("sanbao") (guaranteed food, guaranteed clothing, and guaranteed housing) policy. As scholars have conducted few studies of this particular free education policy, this article presents a comprehensive overview of the emergence and development of the policy, analyzes field survey data collected in a certain township central elementary school in the Tibetan Autonomous Region, and examines the problems facing basic education in Tibet's pastoral districts in the context of the three guarantees free education policy. (Contains 5 notes.)