Lanefan
Victoria Rules
I voted "other", as I've long felt literacy should be to some extent a function of class. Wizards have to be literate, to read and write their own spellbooks. Clerics are the next most likely, due to their education. Rogues next...a certain percentage will have become literate to help in their chosen trade. Sorcerers and Fighters would have the worst chance of being literate.
If one wants to get even more carried away than that, race could also become a factor...say, Gnomes, Elves and Dwarves are on average more likely to be literate than Humans and Hobbits, with Part-Orc literacy being a rarity at best...but even I haven't gone this far.
Then...and in my games I do this...you need to check literacy for each language the PC knows that has a written form; as knowing how to speak a language is not the same as knowing how to read and write it. (and a character not literate in its native language is not literate at all, for simplicity)
Lanefan
If one wants to get even more carried away than that, race could also become a factor...say, Gnomes, Elves and Dwarves are on average more likely to be literate than Humans and Hobbits, with Part-Orc literacy being a rarity at best...but even I haven't gone this far.

Then...and in my games I do this...you need to check literacy for each language the PC knows that has a written form; as knowing how to speak a language is not the same as knowing how to read and write it. (and a character not literate in its native language is not literate at all, for simplicity)
Lanefan