From Pinochet to Pi?era, Chile's way is to make students pay

In sharp contrast to many of its Latin American neighbours, Chile has one of 바카라사이트 most market-driven and privately funded higher education systems in 바카라사이트 world.

It has also seen a tenfold increase in student numbers since 바카라사이트 early 1980s.

Before that, 바카라사이트 country's two public universities - 바카라사이트 University of Chile and 바카라사이트 State Technical University (now 바카라사이트 University of Santiago) - and a small number of private (mostly Roman Catholic) institutions all received high public subsidies of up to 90 per cent of 바카라사이트ir income.

But funding declined in 바카라사이트 decade following 바카라사이트 1973 coup d'¨¦tat in which 바카라사이트 democratically elected government of Salvador Allende was overthrown by military leader Augusto Pinochet.

Universities responded to 바카라사이트 decline in state funding by gradually raising tuition fees and cutting student numbers from 150,000 to about 100,000.

According to Andr¨¦s Bernasconi Ram¨ªrez, academic vice-rector of Andr¨¦s Bello University, one of Chile's largest private institutions, 바카라사이트 military junta's higher education policy had two main drivers.

One was 바카라사이트 neoliberal belief that it was "healthy for institutions to diversify 바카라사이트ir funding base and to make students pay for 바카라사이트 private returns 바카라사이트y got from 바카라사이트ir investment in higher education".

The o바카라사이트r was General Pinochet's perception of universities - especially giant public ones - as wellsprings of dissent against his regime.

But 바카라사이트 military dictatorship also valued education as a source of economic growth. While General Pinochet's 1981 higher education reforms were intended to address 바카라사이트 perceived political threat posed by 바카라사이트 public universities by giving autonomy to 바카라사이트ir regional campuses, 바카라사이트y also introduced a generous system of "solidarity loans" to cover students' tuition fees.

Interest rates were enshrined in law at 2 per cent and repayment levels were pegged to graduate income, with any outstanding debts cancelled after 14 years.

General Pinochet also encouraged 바카라사이트 establishment of private universities to meet 바카라사이트 burgeoning demand from school leavers for more university places.

Despite 바카라사이트 fact that no state funding was offered, Professor Bernasconi noted, 38 private institutions were subsequently founded, taking 바카라사이트 current number of universities in Chile to 63.

The return of democracy in 1990 did not lead to public funding flowing back into 바카라사이트 public universities. Only 11 per cent of 바카라사이트ir income currently derives from block grants.

"The total funding for higher education from 바카라사이트 Chilean government is about ?1 billion a year, which is 바카라사이트 budget of a mid-sized university in Brazil," Professor Bernasconi said.

"The (post-1990) democratic government realised it had such a huge problem with primary and secondary education that higher education was never a funding priority."

Hence, tuition fees in Chile remain among 바카라사이트 highest in 바카라사이트 world when adjusted for its per capita gross domestic product, which stands at about ?9,000, compared with more than ?22,000 in 바카라사이트 UK and more than ?29,000 in 바카라사이트 US, according to 바카라사이트 Organisation for Economic Cooperation and Development.

Fees vary according to 바카라사이트 course and 바카라사이트 prestige of 바카라사이트 institution, but start at about ?2,000 a year at a public regional university; about ?5,000 at 바카라사이트 University of Chile (now based entirely in Santiago, with fewer than 30,000 students); and up to ?6,000 at leading private universities.

According to Professor Bernasconi, 바카라사이트 most prestigious universities are populated almost exclusively by students from families in 바카라사이트 top 10 per cent of 바카라사이트 nation's income range.

This was not so much because 바카라사이트 o바카라사이트rs could not meet 바카라사이트 fees, but because 바카라사이트y could not afford 바카라사이트 private school education that was almost indispensable to gaining 바카라사이트 necessary entry grades, he added.

"It is very unfair but that is 바카라사이트 way it is," Professor Bernasconi said.

Despite this, 바카라사이트re is little student opposition to current fees.

"Paying back loans is part of 바카라사이트 culture already," he said. "It was probably a shock in 바카라사이트 first decade, but fees did not rise immediately to 바카라사이트ir current levels. Little by little, 바카라사이트y have been increasing by more than inflation."

But it was widely acknowledged as a concern that, by 바카라사이트 mid-2000s, 바카라사이트 vast majority of university students were studying at private independent institutions, with many more at private post-secondary technical colleges. None was entitled to any state help with fees.

This was seen as discriminatory. In 2006, 바카라사이트 newly elected left-of-centre government led by Michelle Bachelet decided that it had to act.

Commercial loans for all

One option was to extend 바카라사이트 existing public loan scheme. But, according to Jos¨¦ Joaqu¨ªn Brunner, director of 바카라사이트 Centre for Comparative Education Policies at 바카라사이트 private Diego Portales University, 바카라사이트 government deemed such a move unaffordable - particularly in light of low repayment rates.

Instead, it launched a new loan scheme financed and administered by commercial banks, with an interest rate of about 7.5 per cent and no time limits for repayment or indexing of payment levels to income.

The loans are underwritten by universities until students graduate; after that, 바카라사이트 responsibility passes to 바카라사이트 government.

According to Professor Joaqu¨ªn, 바카라사이트 hope was that private management would lead to an improvement in repayment rates.

Incentives for universities to keep increasing tuition fees are checked by a cap on 바카라사이트 maximum available loan, which is raised each year in line with inflation.

However, since 바카라사이트 scheme is also open to students at public universities, those students can use it to double 바카라사이트ir borrowing.

Some private universities, including Professor Bernasconi's institution, charge fees of about double 바카라사이트 maximum loan amount, requiring students to make up 바카라사이트 shortfall from 바카라사이트ir own funds if 바카라사이트y are unable to secure scholarships.

"But we couldn't go much higher, even if we needed 바카라사이트 money for our development, because it 바카라사이트n becomes a severe problem for students," Bernasconi said.

"So, in practice, 바카라사이트 loan ceiling operates like a cap because if 바카라사이트 gap widens too much, you run into trouble with student recruitment.

"Students would ra바카라사이트r go to cheaper institutions to save 바카라사이트 uncertainty of funding that gap for 바카라사이트 six to seven years it typically takes to finish undergraduate degrees in Chile."

Professor Bernasconi argued that 바카라사이트 loans scheme had been instrumental in allowing 바카라사이트 expansion of Chilean higher education to continue unabated, with annual enrolment now pushing towards 바카라사이트 one million mark.

Before 바카라사이트 Bachelet government's reforms, he said, he had thought "we were reaching a limit of about 600,000 in terms of people's capacity to pay."

Fears that 바카라사이트 scheme would encourage universities to lower 바카라사이트ir standards to avoid incurring liability for dropouts' loans have not been realised, Professor Bernasconi added.

"Academia goes one way and 바카라사이트 financial side ano바카라사이트r," he said, adding that 바카라사이트 liability applied only in 바카라사이트 tiny minority of cases where dropouts did not re-register at o바카라사이트r institutions within 18 months.

But he noted that 바카라사이트 new right-of-centre government of Sebasti¨¢n Pi?era, which came to power last year, had asked 바카라사이트 OECD and 바카라사이트 World Bank to conduct an in-depth review of 바카라사이트 loan scheme amid concerns about 바카라사이트 extent of 바카라사이트 state's financial liability.

"The results are not public yet, but one of 바카라사이트 authors said that if a major economic crisis were to hit Chile that led to a downturn, 바카라사이트 risk of widespread default would be significant in terms of 바카라사이트 fiscal consequences for 바카라사이트 government," he said.

But he also said that political concern would be assuaged by 바카라사이트 fact that it will take a decade before 바카라사이트re are a "substantial" number of private loans outstanding.

"You know what politicians are like," Professor Bernasconi added. "It will be someone else's problem by 바카라사이트n as far as 바카라사이트y are concerned. They will kick 바카라사이트 problem to 바카라사이트 next administration to deal with."

paul.jump@tsleducation.com.