Private Universities Bloom in Chile

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

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»An interview with the chief academic officer at Pitágoras College, a Brazilian for-profit institution that uses distance education
»An interview with the rector of the University of the Americas, a Chilean for-profit institution that has grown exponentially since it was bought by Sylvan.
»A Spanish television commercial for the University of the Americas (English text translation available).
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institution here in Chile's capital, has opened up 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.
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 higher-education 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 for-profit 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