Sweeping reforms set to end for-profit education in Chile

Teachers and students have led calls for free and quality public education in Chile. Mario Ruiz/EPA

Chile’s newly re-elected president Michelle Bachelet has announced a radical set of educational reforms that are set to review the country’s market-based approach to primary and secondary education.

Bachelet’s reforms – aimed at dismantling a series of neoliberal policies put in place in the early 1980s – will be paid for by an overhaul of the tax system. They include three key measures: to end public funding to private, for-profit schools, to make all primary and secondary education free of charge, and to prohibit contested selective practices used in school admission processes. Bachelet sent the proposals to the Chilean parliament on May 19, and a long controversial legislative debate is now expected.

The changes imply a significant departure from the previous three decades of educational policies in Chile, which have gone precisely in the opposite direction by promoting a market-oriented educational system.

A key reason behind the policy shift is the strong and persistent student movement, which started in 2006 (at the start of Bachelet’s first presidential term) and has been continuously active in Chile since 2011. The student movement has consistently demanded the kind of policy reform Bachelet has now announced.

But students took to the streets in May to keep the pressure on. In this context, it is important to ask whether these policy reforms are also based on evidence, as opposed to a mere political response to social protests.

End to for-profit education

First, the announced reform prohibits for-profit private providers of education, when their profits are obtained directly or indirectly from public funds. This is aimed at ensuring public expenditure on education will go directly to improve quality.

Since the creation of the Chilean school voucher system in 1980 the fastest growing sector has been that of for-profit institutions. The voucher system – where the state gives parents a voucher to use in either private or public schools – was created as part of a market-oriented reform that also included decentralisation of the public education and privatisation.

As a result, for-profit institutions currently account for a third of the total national primary and secondary enrolment, and receive state subsidies on equal terms with not-for-profit private and public institutions.

At the post-secondary level, universities are meant to be non-profit entitites. But there is evidence that some new private universities use subterfuges to permit the return of profits for their owners, such as by contracting services or leasing buildings through related companies.

Some international companies including Laureate International and Apollo have purchased large private universities in Chile.

Students marched in May worried Bachelet’s reforms are not going far enough. Sebastian Silva/EPA

In 2011, a special commission of the House of Representatives identified systematic and extensive practices through which the owners of some private universities avoided the law to make profits.

The courts have also begun to investigate allegations of undercover profit and use of illegal tactics by new private institutions to obtain the quality accreditation required to access public resources.

Profit-making motives have also been related to undesirable practices in education, including discrimination against students from low-income families and students with low academic abilities, low quality education services, and the uncontrolled growth of low-cost undergraduate programs with low employability outcomes. There is also evidence that for-profit schools are less effective than non-profit schools in terms of educational attainment.

Free education for all

In another section of the reforms, Bachelet has embraced free education, proposing the end of the co-payment system at the school level. This is a family fee-charging mechanism called “shared funding” that allows and encourages private voucher schools to charge a tuition fee without losing access to the state subsidy. It is used in around 80% of private voucher schools.

The fact that Chile’s government-funded private schools are allowed to charge tuition fees to families has been a highly controversial issue for two decades, because compulsory education is formally “free” in Chile.

The co-payment system introduces a price discrimination mechanism among schools, which is directly linked to the socio-economic status of the student population. This co-payment system has been linked to the high and increasing level of socioeconomic school segregation in Chile, which is the highest among OECD countries.

On the other hand, there is no evidence that this mechanism has improved Chilean educational quality.

The fact that Chilean students are so highly segregated may be related to the finding that consistently indicates that – in comparative terms – students’ academic achievement is strongly related to students’ socio-economic status in Chile. By eliminating the co-payment system, Bachelet is attempting to reduce school social segregation and reinforce parents’ school choice.

End to discrimination

The reforms are also trying to eliminate discriminatory practices by schools. Chilean schools apply arbitrary mechanisms for selecting students, both in the admission process and throughout students’ academic trajectories.

Primary and secondary schools select students based on past performance, prediction of future performance, student’s behaviour, family income, and other family characteristics. These selective mechanisms are especially prevalent in private institutions, including schools that receive state funding.

Many of these practices have long been denounced by international organisations and human rights advocates as detrimental to students’ right to education. Nevertheless, Chilean political and judicial institutions have previously defended the notion of “free enterprise” in the education market, giving educational providers freedom to set their own rules to admit and expel students. The school selection processes were partially regulated by Bachelet’s General Education Law in 2009, but these regulations seem to have had little impact on school admission policies.

These selection methods provide a competitive advantage to private schools compared to public schools. The state actively promotes parents’ school choice by publishing school rankings based on students’ performance and applies several test-based accountability policies, including strong sanctions to underperforming schools. Research has shown that when controlling for selection bias, the performance advantage observed in private schools compared to public school disappears.

Opposition likely

Overall, Bachelet’s announced reforms are attempting to reverse the extreme marketisation of Chilean education. But the technical complexities and political challenges of these policies make them a highly risky decision, and much debate is likely to ensue.

Representatives of private education (including the Catholic Church which is a key educational stakeholder in Chile) and opposition political leaders have already criticised different aspects of the reforms, arguing that they jeopardise the diversity of educational providers and the freedom of education.

Nevertheless, if successful, Bachelet will create a more appropriate institutional framework to recover, strengthen and expand Chilean public education.