Privatization and educational inequality in Chile

Could elementary schools really be the source of student woes?

In a Santiago Times op-ed this October, I examined whether implementing a tuition-free higher education system would be a smart policy for Chile, ultimately concluding that it would not. A number of readers commented with their own opinions, many of which brought up valid points about injustices in Chilean education that were beyond the scope of the original article. Their comments beg the question: if free university tuition will not solve the problems of Chile’s education system, what will?

Photo by Valerie Schenkman Sanjines/Santiago Times

My research on university education revealed that inequalities in Chile’s university population had more to do with pre-existing socioeconomic inequalities than the availability of free tuition. Free tuition is available in Brazil, for example, but Brazilian universities are the most unequal in Latin America. A World Bank report on Latin America agrees, noting that “quality differences in basic education” create a “situation in which affluent students are overrepresented [even] in free public higher education institutions.”

Often the inequalities at the university level are simply carried over from those in basic and secondary education. Student protesters know this well, and high school student movement leaders have demanded reforms to secondary and basic education to tackle the issue at all levels. Let’s not forget that the 2011 movement itself was inspired by the protests of Chilean high school students in 2006.

At the heart of the issue is Chile’s highly privatized education system, which allows private schools to receive public funds without conforming to the constrictions that public schools are bound by. Critics of the system claim that it subsidizes the segregation of Chilean schools by allowing Chile’s privileged students to attend private schools while public schools, which enroll higher-need students from lower socioeconomic classes, are deprived of funding.

Privatizing Education

The current system was set up in a 1981 under the military dictatorship of Augusto Pinochet. This reform set aside government subsidies, or “vouchers,” to be given to public and private schools on the basis of their enrollment.

The vouchers would allow private schools to provide quality education without charging tuition fees, thus creating viable alternatives to public schools for low to middle-income families. By doing so, the reform also sought to create competition between private and public schools. As was the case in so many other Pinochet reforms, the free market was to be allowed to run its course and create the most efficient outcome.

Many families took advantage of their new options, and from 1981 to 2004 enrollment in subsidized private schools increased from 15 to 41 percent of the eligible population.

Yet while public schools were obligated to accept and accommodate all students, private schools could establish selective admission criteria, such as entrance exams and parental interviews. The vouchers were valued equally regardless of the student’s needs, and thus schools had an incentive to reject disadvantaged or disabled students, who carried with them higher education costs.

Thus in practice, families that left public schools for the private system were, on average, wealthier than those that remained.

Moreover, subsidized private schools did not have to remain free. Though schools that accepted state vouchers could not charge tuition, a 1993 legal revision allowed subsidized private schools to charge parents “shared finance” fees of up to US$68 a month (in a country where the monthly minimum wage is US$365 dollars), another barrier to entry for the nation’s neediest students.

Private schools were also still allowed to make profits while accepting state vouchers, and around 70 percent of them continue to profit today.

A View from the Ground

As a program coordinator for a educational exchange program in Chile, I have visited universities and high schools throughout the country and I have met teachers, school directors, and students from across the board. In doing so, I was surprised by the amount of middle and lower-middle class families able to attend private high schools, but was also disappointed that these schools lacked the funding and rigorous curriculum that one associates with private schools in developed countries.

In the U.S., private schools are seen as elite institutions that serve only the top socioeconomic classes. These exist in Chile as well, but they are distinct from the public schools and the private, voucher-receiving schools. These are the elite private schools that opt to charge high tuition and fees that are on average five times the value of a government voucher, and they receive students whose families can pay, negating the need for government support entirely.

Throughout my high school visits, I was utterly amazed by the academic preparation of the students in these schools. I never encountered a student from these institutions with a grade point average below a B plus, and nearly all of them are fluent in at least one foreign language. On the other hand, the private-voucher school students with whom I interacted consistently displayed lower marks and had a simpler curriculum than their more elite counterparts. It was suggested to me that I not even waste my time visiting public schools.

Attacking the Problem

To be sure, my experience by itself is hardly a reliable indicator of overall academic achievement in Chile, but in this case it coincides nicely with the research on the subject. A 2005 study by the University of Chile found that tuition-charging private schools have higher rates of achievement than private-voucher schools. The elite schools were found to display “significantly higher math mean achievement results and have a more equitable social distribution of achievement.”

Another study by the International Journal of Educational Development also revealed that, although a broad spectrum of students have access to private-voucher schools, inequality between those schools has persisted. Most crucially, socioeconomic status was found to be twice as strong a determinant of academic achievement in private-voucher schools as in public ones.

The fact that the privatization of education not only fails to address socioeconomic inequality in Chilean society, but actually strengthens it, should be of tremendous concern for policymakers and parents alike. If Chile ever hopes to escape the dubious honor of being one of the world’s 20 most unequal societies, it must provide social mobility for its citizens as early in their lives as possible. To be fair, abolishing the voucher system has been among the student movement’s demands this year, but it has regrettably taken a backseat to the demand for free tuition for university students.

Some steps have been taken to address the problem. A 2008 law created larger vouchers for economically disadvantaged students and prevents private-voucher elementary schools from selecting students based on entry exams and parent interviews. However, while the law promised to incentivize socioeconomic diversity in private schools, a study released this July reported that its regulatory provisions have yet to be practically enforced and many private schools continue to practice discriminatory admissions policies.

The 2008 law is an example of an enhanced focus on education that has taken hold in Chile in recent years. Since 2006, public investment in education has increased from 3.2 to 4 percent of GDP. Still, this number is well below that of most Latin American countries, most of which are poorer than Chile (Brazil and Argentina invest closer to 5 percent of their GDP, and Bolivia and Costa Rica invest over 6 percent, according to the World Bank).

The voucher system also continues to distort socially desirable incentives by allowing private-voucher schools to make profits, charge fees and impose their own acceptance requirements for incoming high school students. What’s more, the manner in which voucher money is spent is rarely regulated. The voucher system, rather than create competition among schools, simply allows for private schools to deprive public schools of their funding and their highest achievers, while leaving them to support the most disadvantaged students.

This can all change, but it would require increased investment and regulation from the state. This doesn’t mean that the voucher system needs to be abolished altogether, but in its current form it certainly does not provide a fair playing field for public schools. Reform to this system (at the very least prohibiting voucher-receiving schools from earning profits or increasing the oversight of the direction of voucher money), should seem uncontroversial, but the unfortunate truth is that this priority has apparently been lost in the massive stack of demands that have been swarming the government inbox this year.

By David Pedigo (editor@santiagotimes.cl)
Copyright 2011 – The Santiago Times