Private Universities Bloom in Chile
The profusion of institutions has increased opportunities, but raised questions about
quality
By BURTON BOLLAG
Santiago, Chile
During the last six months, Andrés Bello University, a major private
institution here in Chile's capital, has opened up
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» An interview with the chief academic
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» An interview with the rector of the
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» A Spanish television commercial for the
University of the Americas (English text
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375,000 square feet of shiny new classroom,
laboratory, and library facilities for programs in
medicine and the biological sciences.
Diego Portales University, another major private
institution, has opened new schools of medicine,
nursing, dentistry, medical technology, sociology, and
other disciplines during the last three years, more than
doubling, from 13 to 28, the number of disciplines it
teaches.
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And the University of the Americas, a private
institution that recruits students with low grades, has
just opened its fifth campus. With enrollment having
skyrocketed from 4,000 to 18,000 in the last three
years, the university is expanding its facilities at a
fever pitch.
Although Chile already has one of the highest rates of participation in higher
education in Latin America -- 30 percent of young people get a postsecondary
education -- demand continues to grow and is mainly being met by a steadily
expanding private sector. By law, private universities, usually considered a
second choice for students compared with government-supported institutions,
must be nonprofit. The law is often not respected, and does not appear to be
deterring large private investments in the sector. Chile's example provides insight
into the benefits -- and challenges -- that the rapid development of private higher
education can bring to a country.
The growth of the private sector has helped fuel a doubling in total highereducation enrollment in Chile during each of the last two decades: from 100,000
in 1980 to 250,000 in 1990, and to 480,000 today, according to official figures.
That development is set to continue. Chile's education minister, Sergio Bitar,
estimates the number of higher-education students will grow to one million by
2012.
The projected increase has little to do with population growth, says René Lara,
director of international student exchange at Diego Portales. Chile's birthrate is
not high. Rather, the increase is occurring, he says, "because the lower classes
are [finally] going to university." Indeed, up to now, about 80 percent of students
came from the most affluent 40 percent of the population. Still, while the
proliferation of private institutions is bringing more opportunities to study and a
welcome diversity to postsecondary education, many observers voice concerns
that some private institutions may not have adequate standards of quality.
A walk down República Street, in the university district of downtown Santiago,
where private institutions line both sides of the road, reveals that many of Chile's
37 private universities are investing heavily in new buildings, libraries, and
equipment. Students mill around the sidewalks of the narrow, leafy street, waiting
for classes and eating empanadas -- fried dough pouches filled with meat,
cheese, or shrimp -- purchased from pushcart vendors.
Gleaming New Buildings
As institutions move to capture slices of the growing market, competition has
become fierce. "Other private universities were growing very fast and taking
away good students from us," says José Julio León Reyes, academic vice rector
of Diego Portales, which has a student body of 9,500. Established in 1982, it is
one of Chile's oldest and most respected private institutions. "We were losing
ground, so we had to open new areas of study," he says. The aim, say senior
administrators, is to become a comprehensive institution capable of competing
not only with other leading private universities, but also with the best public and
Catholic institutions.
The private universities charge an average yearly tuition of about $3,000. Tuition
payments provide profits for investors, and resources to reinvest in university
development. But a number of institutions are seeking larger sums to finance
major expansion.
Diego Portales, a nonprofit institution, came up with an innovative solution. It
recently issued a bond for $23-million. Raising money this way is common
among American colleges and universities, but has rarely been used in Latin
America. The International Finance Corporation, a World Bank arm, helped
arrange the deal by providing a guarantee of repayment for 30 percent of the
bond. This strategy is seen as advantageous because if the issuing institution
manages to get a good credit rating, a bond typically carries lower interest
payments than a bank loan, and allows a longer period of repayment.
Horacio RÌos, Diego Portales's vice rector for administration, finance, and
development, says institutions like his have a harder time raising money than forprofit universities, whose owners can provide capital, or public institutions, which
can benefit from government largess. "We want to change the paradigm," says
Mr. RÌos. "We don't have owners or the government behind us: We want to show
the market can meet our needs."
Other private Chilean institutions have sought foreign backers. After negotiating
with concerns in the United States, including Apollo International, Andrés Bello
was purchased this month by Sylvan International Universities, an American
company, for $68-million. Manuel Krauskopf, who was just promoted from vice
rector to rector of Andrés Bello, says the university felt strongly that an American
owner could furnish both capital and access to international collaboration on
various academic projects. "In this period of rapid growth and maturation," he
says, "it was clear that internationalization is a must."
Sylvan already owns the University of the Americas and has turned it into the
largest and fastest growing private institution in Chile.
The Dictatorship's Legacy
Private universities were only authorized in 1982, in a decree issued by the
military government of Gen. Augusto Pinochet. The dictatorship, which ran Chile
for 17 years, had a strong impact on higher education. The public universities
had been centers of support for the ousted socialist president, Salvador Allende.
After the coup, in 1973, students and scholars were abducted, tortured, and
killed. Many more were expelled or forced into exile. At the University of Chile,
the country's main public institution, 100 of the 1,000 faculty members of the
large teaching hospital were forced out. "We lost whole specialties," says Cecilia
Sepúlveda Carvajal, vice rector for academic affairs and a professor of
immunology.
Yet the dictatorship, which ended in 1990, had a longer-lasting influence on
higher education through its penchant for deregulation. In economics and social
policy, the regime was strongly influenced by the free-market approach
championed by Milton Friedman and his colleagues in the economics department
at the University of Chicago. One reason was that the economics department of
the Catholic University of Chile had built up a close cooperation with Chicago
and, after the coup, provided the government with economists who were
predisposed to deregulating many areas of public life, including higher education.
"Many people, myself included, were very suspicious," says Mr. León, the
academic vice rector at Diego Portales. The military regime "had a very bad
policy on human rights. But opening up [higher education] to the market was a
very good thing, and quality is improving because of competition." Today, the
private institutions enroll 53 percent of all Chilean college students.
Unfair Competition?
Several other Latin American countries had already authorized private higher
education. In Brazil and Colombia, private institutions now account for almost
two-thirds of enrollment. But Chile's military government made another decision
unique for the region: It allowed the public universities to start charging tuition,
and today, they charge about the same as private institutions.
Direct government support now provides only about a third of the budgets of the
25 "traditional" universities -- the public institutions and the older, state-supported
Cath-olic ones. José Brunner, a professor and former head of Chile's National
Accreditation Commission, and one of the country's leading higher-education
experts, says the withdrawal of government financial responsibility has not been
all bad. It has forced the public universities to modernize their structure,
management, and study programs as they compete with the better private
institutions for students and some research funds.
Yet private institutions complain the competition is not fair. Only students enrolled
at public institutions are eligible for government-sponsored student loans, mak-
ing it hard for the children of less-affluent families to enroll at private universities.
But this may soon change. In a state-of-the-union address last month, Chile's
president, Ricardo Lagos, underlined his government's commitment to
consolidate -- and better regulate -- private higher education. He stressed his
support for draft legislation that would extend loans to students of private
institutions that win accreditation under a strengthened oversight mechanism
recently adopted.
Some say the proposed change is overdue. "Just like in other developing
countries, our [higher education] system has grown in a really big way," says
Gonzalo Zapata LarraÌn of the National Accreditation Commission. "But we don't
yet have good quality-assurance systems. We have some institutions giving high
quality education: Others are really a mess."
Meanwhile, investors are making huge profits from higher education, even
though, by law, private institutions must be nonprofit. Generally investors get
around the restriction by forming a company that owns a university's buildings
and land. The institution officially makes no profit, but pays a large "rent" to that
company.
But few people are concerned. "Some private universities really are nonprofit;
some make big profits," says Mr. Zapata of the accreditation commission. "But
most institutions have learned, the best way to succeed is to offer good
education. Chilean law does not permit profit-making universities, but no one
looks closely at this."
The translation of a Spanish television commercial for the University of the
Americas
Sylvan International Universities, the private university transnational, present in Spain,
France, Switzerland, Mexico and the United States, chose the University of the Americas
in Chile. Quality, academic excellence and leadership: keys to a prestige that today
makes it part of a real global network. University of the Americas, Sylvan International
Universities. A whole world, a great university