The Cost of Educational Reform in Chile

Sources:
El Chileno: A partir de hoy a las 10 horas: Reunión del ejecutivo con estudiantes
FT: Business Braced for Chile Tax Rise
MercoPress: Chilean Students Will Assess Piñera Road Map for Education Reform Before Next Meeting
The Nation: Demanding Economic and Educational Reform in Chile
Santiago Times: Chilean Students Set to Reject Government’s Proposed Working Groups

For over three months, Chilean president Sebastián Piñera has stood firm against students, educators, and parents seeking university-level educational reform in Chile. Although Chile has the highest per capita income in Latin America, it also has the most uneven socioeconomic distribution thanks, in part, to its dysfunctional private educational system. Because of the high cost of private education and high interest rates on education loans, many Chileans have been unable to afford an education, and others who have pursued their education have had to take on enormous amounts of debt. Even those students who can pay for a private education are not necessarily getting their money’s worth. The quality of Chile’s educational system is low, due partly to corrupt school administrators at direct-grant schools (private institutions that receive some state funding) pocketing and misusing state funds. To address these disparities in access and quality, protestors are demanding that the state provide “free and equal quality education for all.”

President Piñera’s approval rating has steadily declined as he has continued his resistance to educational reform. Just last week, he finally agreed to hold talks with the student protestors, a move some observers speculate was motivated by a desire to improve his popularity for the upcoming election cycle. President Piñera has offered to increase grants and decrease the interest rate on student loans to help students pay the costs of private universities, but he has adamantly refused to provide free education for all Chileans. Commentators have observed that President Piñera is a free-market conservative who believes that the government should not interfere in relations between buyers and sellers. He does not view education as a right to which all Chileans are entitled, but rather as a good that private vendors sell to those who can afford to pay the price.

In all likelihood, President Piñera will compromise by proposing initiatives that support a “mixed” educational system of public and private institutions. However, financing public education would require a redistribution of resources, including potentially investing profits from direct-grant schools into public education. The government fears that such redistribution would encourage waste as it fears that state-funded institutions are more likely to misuse public funds than are private institutions.

In addition to redistributing current profits, the Chilean government must also find new sources of revenue to pay for any new educational programs. New taxes are the most obvious potential source for funds, but the Chilean mining industry (the nation’s largest industry) worries that it will bear the brunt of the cost. After last year’s increase in mining royalties, mining companies currently pay about $11 billion in taxes, which is a quarter of the government’s total revenue. However, Chile still taxes mining companies at a lower rate than many other countries. Neighboring Peru, for example, imposed a new mining royalty last month that will add an additional $1.1 billion in costs to mining companies each year. Mining companies in Chile hope to avoid a similar fate.

Student activists and other concerned citizens feel that President Piñera’s proposed measures do not go far enough to remedy educational disparity in Chile. Therefore, student leaders have openly rejected the president’s offer to work together with the government to achieve reform. Critics believe that without more input from students and educators, governmental reform will preserve the inequalities of privatized education in Chile and continue to encourage profiteering by direct-grant schools. Despite President Piñera’s attempt to address the students’ concerns, his efforts may be too little, too late as far as his own re-election is concerned. Unless President Piñera and the activists agree on educational reform, educational disparity in Chile will continue to affect its development.