Financing of Higher Education in Latin America Lessons from Chile, Brazil, and Mexico

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1 Inter-American Development Bank Financing of Higher Education in Latin America Lessons from Chile, Brazil, and Mexico Paulina Gonzalez-Pose Sabine Rieble Aubourg Tertiary Education Financing Regional Workshop Barbados, November, 2005

2 Table 1. Schooling Enrollment Indicators, Countries Bahamas Barbados Jamaica T&T Brazil Chile Mexico Germany France Netherlands U.K Ireland Japan Gross Enrollment Secondary (%) Net Enrollment Secondary (%) Gross Enrollment Tertiary (%) *2000 Source: World Development Indicators, *

3 Table 2. English-Speaking Caribbean: Unemployment Rates by Age Group and Level of Schooling, Country Bahamas Barbados Belize Jamaica St. Lucia T&T % Unemployment rate Years old Females Males % Total Unemployment by Level of Schooling Secondary Higher Source: Martin Carnoy, 2005

4 Graph 1. Public Spending/ University Student in Caribbean and Latin American Countries: 1980,2000 (2000ppp$) Source: Martin Carnoy, Spending/Student Jamaica T&T Brazil Chile Mexico Barbados Guyana

5 Table 3. University of the West Indies: Spending per Student and Proportion Paid by Government, Tuition, and Commercial Operations, by Campus (2003 US$ and percent) Year Cave Hill Campus Mona St. Augustine Spending/Student* (US$) Govt Contribution (%) Tuition and Fees (%) Commercial Operations (%) 0 1 <1 Source: The University of the West Indies (2004).

6 Strategies for financing higher education Charging student fees Promoting the expansion of private colleges and universities Complementing privatization with publicly subsidized student loan programs Subsidizing private costs through distance education programs Increasing university efficiency through accountability based financing

7 Case Studies Chile: a model of cost sharing, a student loan program, and an attempt to introduce performance based allocation of resources to universities Mexico: a case study of developing a private university scholarship program for students Brazil: a model of expanding higher education through expansion of private institutions

8 Latin American Financing Systems The traditional LA model The Brazilian model The Chilean model

9 Graph 1. Gini Coefficients by country Gini Coeff. Brazil St. Lucia Brazil Chile Bahamas Mexico St. Lucia T&T Barbados Jamaica

10 Loan Program Schemes Mortgage Type Loan Income Contingent Loan Schemes

11 Chile Full cost sharing Government subsidies Student loans

12 Graph 2. Chile: Enrollment increase (Thousands) Higher Education

13 Chilean Reform in the 1980s Diversification Deregulation Decentralization Change in financing mechanisms

14 Table 4. Private Rates of Return, late 1990s and early 2000s, by Country (annualized percent) Country Secondary Post Secondary University Barbados Guyana Jamaica 3 8* -- St. Lucia T&T Chile Mexico ** Brazil *Rate of Return to tertiary education as a whole (includes university) **Chapman, 2003 Source: Martin Carnoy, 2005

15 Mexico Student loan program for private institutions

16 Brazil Expansion of private institutions

17 Table 5. Number of Institutions and Enrollment in Tertiary Education Institutions in Brazil, by Type, Type of Institution Numbe r Enrollment (thousands) %Total Enrollment Graduates (1998) Universities 155 1, ,000 Federal State ,701 Municipal ,177 Private ,256 Non-University Multiple Faculty ,632 Public ,032 Private ,055 Centers for Technology Education ,002 Public ,002 Private Total 1,097 2, ,761 Source: World Bank Higher Education in Brazil.

18 BRAZIL Tuition: public universities (zero tuition policy) private universities (full and discounted tuition) Access and Equity 2003: entrance exam (Vestibular): 9 applicants/ 1 admission in public universities 2.5 applicants/ 1 admission in private institutions Affirmative Action (pilot project)

19 Brazil Privatization Quality Assurance: PROVAO, INEA Accreditation Credit Programas de Credito Educativo 1999 Financiemento estudiantil (FIES) Distance Education

20 Conclusions 5 strategies for financing higher education Cost-sharing Student loans (public/private) Privatization Performance Based Financing Subsidy of Private Costs through Distance Education Programs

THE UNIVERSITY OF THE WEST INDIES OPEN CAMPUS

THE UNIVERSITY OF THE WEST INDIES OPEN CAMPUS ADVERTISEMENT COUNTRY MANAGER THE UNIVERSITY OF THE WEST INDIES OPEN CAMPUS COUNTRY SITES TRINIDAD AND TOBAGO Applications are invited for suitably qualified