HESA

Higher Education Strategy Associates

Tag Archives: Chile

August 31

Free Tuition Developments

One major trend of the last couple of years in global higher education has been the arrival of a wave of “free tuition” policies in jurisdictions that formerly charged them and which – in some cases – have substantial private higher education sectors.  But announcing free tuition is one thing: actually pulling it off is another.  Let’s take a quick look-in at how things are playing out in various parts of the world.

In the Philippines, President Rodrigo Duterte (Luzon’s answer to Donald Trump) declared education at all public universities free in the state budget earlier this year, and the policy came into effect this fall.  Of course, this only affects a minority of students because public universities only educate about 45% of Filipino students: the rest attend one of the country’s 1500 or so private universities.  And fees were never that high to begin with (in the region of $150/year at most state colleges).

But what’s brilliant about the Philippines “free tuition” program is the packaging.  The budget for implementation is only P8 billion ($200 million Canadian or $160 million US), which is considerably short of what is needed to cover all students.  So to make up for it, they are i) putting an academic progress filter on the program (i.e. fail too many courses and you have to start paying fees) and more importantly ii) putting an income filter on it as well.  But, intriguingly, the law doesn’t say “targeted aid for the poor”; rather, what it says is “as a rule, fees shall be abolished” but that universities “shall create a mechanism to enable students with the financial capacity to pay…to voluntarily opt out of the tuition and other school fees subsidy or make a contribution to the school.”  In practice, what this means is that the funds will be distributed to institutions who in turn will provide fee waivers to students in order of financial need (a slightly more detailed explanation is available in this article from the Philippines Star).  Too rich?  No subsidy.  But the actual cut-off line will vary somewhat from institution to institution.

(I know that sounds weird, but running student aid through institutions rather than a national government is actually pretty common in southeast Asia).

Still, the government is sufficiently worried about extra demand that it is reinstating an entrance exam to keep growth in numbers down.  Which of course does make you wonder why they put free tuition in place in the first, if not to increase participation.

Over in Chile, President Bachelet has moved to expand the free tuition subsidy (“gratuidad”) to students from the sixth income decile starting this coming February; previously it was only available to students from the lowest five deciles.  In theory, the government is meant to nudge this up to the seventh decile by 2020, but the likelihood that the left will still be in power by then is pretty slim: polls right now have former centre-right president Sebastian Pinera well out in front, and he’s already more or less said he’s not committed to anything above the 50% threshold.

In the US, two states – New York and Oregon – brought in “free tuition” programs last year.  Oregon’s was a free community college plan, much like Tennessee’s; New York’s was a “targeted free tuition” system for 4-year colleges, which looked much like those in Ontario and New Brunswick only less well-targeted.  Now, both are slightly off the rails because of the weird way that legislation and appropriation happen separately in the US.  Despite “enacting” free tuition, neither state actually set aside enough money to actually make it work properly.  In Oregon, the short-fall means roughly 20% of students who should have been eligible will not receive benefits.  In New York, the demand for the new “Excelsior” scholarships exceeded the budgeted amount by a factor of three.  The best one can say for this situation is, as my colleague Robert Kelchen says, is that this is an unrivalled opportunity to test the “disappointment effect” in student aid.

Meanwhile, back in Canada, our two targeted free tuition programs – in Ontario and New Brunswick – seem to have started without much of a hitch.  For the moment, at least, we’re leading the pack in terms of coherent implementation.  Let’s hope it stays that way.

May 25

Free Tuition: A Rocky Rollout in Chile

So the big news last week in Santiago was the announcement of the start of the “free tuition” plan, which was part of President Michelle Bachelet’s election platform in 2013.  Only it’s not quite free tuition, and it’s still not clear how it will be paid for.

I’ve written previously (back here) about the Bachelet promise, and the potential difficulties with implementing it in a country where most higher education is provided by private institutions, and forced nationalization is expressly prohibited in the constitution.  To those difficulties have been added the fact that the big tax hike the government thought would finance its reforms to compulsory and post-secondary education isn’t in fact going to raise quite as much money as previously expected, due mostly to a slump in the price of Chile’s main export, copper.   Not to mention the fact that the President herself has seen her approval ratings crater due to corruption allegations regarding her son.

The announcement last week left a lot of questions unanswered.  Free education, the President said, would now be available to “el 60% de los estudiantes más vulnerables”, which sounds like 60% of students, but based on the number of students estimated to benefit – roughly 250,000 students, or a quarter of the total – actually seems to mean “students from the poorest three income quartiles”.  There was no explanation of how institutions would be compensated for taking students.  And the President added a curious phrase, saying that students would be able to “accedan a la gratuidad completa y efectiva, sin beca ni crédito”. One hoped that the intention here was to underline that she meant free tuition and not just free net tuition (i.e. where grants offset the cost of fees).  However, some – including the academic and former Minister Jos Joaquin Brunner – have wondered whether it might mean that those who receive free tuition will lose eligibility for student aid.

Weirder by far is the President’s decision to simply exclude some institutions from the process.  Universities that are members of CRUCH (an acronym meaning “Council of Rectors”) – 16 public and 9 private universities that make-up the older (pre-1973) higher education system – were included, as were a selection of the country’s Institutions Professional (basically, Polytechnics), and its Centros de Formacion Tecnica (basically, community colleges).   But the country’s 35 private post-1973 universities were pointedly left out of the program.  No reason for this was forthcoming; and in case you’re wondering, it’s not solely because they are private, as all the IPs and CFTs are private, and they were included in the scheme.  One senses that some decades-old animosity between university sectors is playing-out here.  Whatever the reason, it puts Chile in the weird position of giving free tuition to median-income students attending a CRUCH university, and giving nothing beyond loans to students from the bottom of the income scale studying in the same program at a private university.

In theory, the government is committed to implementing full, across-the-board free tuition at some later date.  But it’s unclear exactly when this will happen and, given the situation in the private universities, whether it will in fact cover all forms of education.  Will it, for instance, cover graduate studies?   Will it cover 7 or 8 years of undergraduate education (currently the norm), or only the first 4 or 5?  Most importantly: how are institutions going to be compensated for taking all these students for free?

Hopefully, all of these questions will be resolved expeditiously.  But with only seven months remaining until the implementation date, Chileans are still in the dark about a lot of important details.

October 15

Free Tuition in Chile

Last fall, Michelle Bachelet was once again elected as President of Chile, on a considerably more radical platform than that which propelled her to the same position eight years earlier.  One of her many campaign promises was to make higher education completely free.  This is a Big Deal.  It’s not like Germany, where tuition was only ever a derisory sum; in Chile, tuition payments are equal to 2% of GDP, a larger percentage than anywhere else in the world, outside Korea.

So, ten months on from re-election, how are they getting on with things?  The quick answer is: slowly.  But not for want of trying.

The heart of the problem is a constitutional provision, dating from the Pinochet era, which guarantees Chileans the freedom to make a living however they want.  Effectively, this prevents the government from compulsory nationalization.  In higher education, where the vast majority of institutions are private (though some of them receive public funds), this makes effectuating the Bachelet promise difficult.  So the government has gone down the route of trying to buy private institutions’ obedience by paying student fees on students’ behalf.

Now, the government isn’t stupid; it’s aware that private universities are likely to respond by raising fees.  That’s why they intend to rely on something called a “reference tuition fee”.  This is an invention of the Chilean student aid system, which is the only one in the world that takes the Bennett Hypothesis (i.e. that student aid encourages cost inflation in higher education) seriously.  Basically, Chilean loans programs don’t provide 100% of tuition – they only cover a “reference” fee, which ranges from about 80% to 100% of the actual fee.  The problem is that reference fees vary significantly: the fee for a law program at one institution may be vastly different than at another.  So the first task to make this work is to create a “standard” reference fee – but this is causing enormous problems.  Set it too high and you risk getting fleeced by the institutions; set it too low, and institutions will opt out of the system.  It’s not clear that the government will be able to find such a not-too-hot-not-to-cold fee.

Although the government claims to be able to fund the one-time cost of transferring 2% of GDP from the private to the public sector via new taxes, some independent observers question whether it will, in fact, be able to fully replace the tuition income institutions will lose.  Even if this money can be replaced, it’s not exactly clear where money will come from to fund future system growth or system quality improvement.

More generally, there’s a question about value-for-money in this policy.  Even the proponents of free fees don’t dwell on the promise that the system will become more equitable.  Access to higher education and stratification in Chile are already reasonably good: indeed, their access outcomes look a lot like Canada’s, despite significant fees in both the public and private sector, and the fact that Chile’s (mostly private) system of secondary education creates enormous inequities in outcomes, meaning room for improvement is not great.

Mostly, what proponents of free fees in the Chilean system believe is that “the market should not decide” in higher education.  Which, you know, fair enough.  Only two problems: i) historically, the state tends not to be so hot as a master, either; and ii) in a country that has as many challenges as Chile, is such a goal worth 2% of GDP?  Honestly?

January 10

Better Know a Higher Ed System: Chile

Chile has a very diverse higher education sector, and has been subject to a lot of policy experimentation in recent years.  That makes it a case to watch, both regionally and globally.

Prior to the 1973 coup, Universidad de Chile was the country’s pre-eminent school, with campuses across the country.  But academia didn’t fare so well under Pinochet, as there were waves of arrests, exiles, and, in some cases, executions.  All of this meant that, on occasion, whole departments suddenly vanished.  U de Chile was subsequently split into a dozen smaller institutions, most becoming independent – but less powerful – public universities in their own right.

By the end of the military regime, there were 25 “state-sponsored” universities – 16 public and 9 private (mainly Catholic), which are usually referred to as the “CRUCH” universities (pronounced croossh (it’s an acronym for the Council of Rectors), all funded through a mixture of public funding and student fees (more the latter than the former).  None were really what you’d call a research university – Latin America historically has never really had many of those – but it had the usual prestige hierarchy, with the two oldest universities, Universidad de Chile and Pontifical Universidad Catolica de Chile, at the top.

But the key Pinochet-era decision was to open the higher education market to private competition.  The result was the creation, over three decades, of 35 new, fully-privately funded universities.  Few are considered anything like the equal of the older universities, academically.  Partly, that’s like private universities almost everywhere, as they tend to avoid offering programs in prestigious but capital-intensive subjects like Engineering, Science, and Medicine; but mostly it’s because a lot of them are for-profit, and are therefore seen as suspect.

Chile’s sub-baccalaureate system – 45 Institution Profesional (essentially, polytechnics) and 68 CFTs (essentially, community colleges) is entirely privately-run, the only country in the world where this is so.  The existence of these institutions is an irritant to CRUCH universities, who have responded by using their influence in the accreditation system to (essentially) impose accreditation criteria designed for universities on community colleges.  Result?  Only 2.2% of CFT programs are actually accredited.

What’s distinctive about Chile is the diversity of its funding channels.  There’s a public subsidy for the CRUCH universities, which is mostly historic rather than formula-driven, and a different, voucher-ish public subsidy for private universities able to attract students with high scores on the national university-entrance exam.  There’s one student loans program for CRUCH universities, and another, much less subsidized, program for everyone else.  Add in some half-hearted attempts at performance-contract funding, a dozen or so bursary programs for various target groups – plus, of course, the fact that as a percentage of GDP, Chile’s private contributions to higher education are among the highest in the world (nearly 1.5% of GDP), and you can see why the policy environment is fairly chaotic.

Now, add into all this the fact that President-elect Bachelet has promised to make all education free.  What does that mean in a system which is 70% + private?  No one knows.

Stay tuned.  This will get interesting.