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
Table 1. Schooling Enrollment Indicators, 2002. Countries Bahamas Barbados Jamaica T&T Brazil Chile Mexico Germany France Netherlands U.K Ireland Japan Gross Enrollment Secondary (%) 91 106 84 82 108 89 76 100 109 122 179 107 102 Net Enrollment Secondary (%) 72 79 60 88 94 89 95 83 100 Gross Enrollment Tertiary (%) *2000 Source: World Development Indicators, 2005 76 90 75 72 -- 38* 17 9 21 42 21 51 56 58 64 52 51
Table 2. English-Speaking Caribbean: Unemployment Rates by Age Group and Level of Schooling, 1999-00. Country Bahamas Barbados Belize Jamaica St. Lucia T&T % Unemployment rate 15-24 Years old Females 22 22.1 34.7 46.2 51.8 30.9 Males 10.6 16.8 15.4 23.9 38.1 21.9 % Total Unemployment by Level of Schooling Secondary 59.1 75.4 15.3 -- 27.2 60.7 Higher 8.3 7.0 4.8 -- 3.9 0.8 Source: Martin Carnoy, 2005
Graph 1. Public Spending/ University Student in Caribbean and Latin American Countries: 1980,2000 (2000ppp$) Source: Martin Carnoy, 2005. Spending/Student 14000 12000 10000 8000 6000 4000 2000 0 Jamaica T&T Brazil Chile Mexico Barbados Guyana 1980 2000
Table 3. University of the West Indies: Spending per Student and Proportion Paid by Government, Tuition, and Commercial Operations, by Campus (2003 US$ and percent) Year 2002-2003 Cave Hill Campus Mona St. Augustine Spending/Student* (US$) 8490 9240 6800 Govt Contribution (%) 70 69 85 Tuition and Fees (%) 23 17 18 Commercial Operations (%) 0 1 <1 Source: The University of the West Indies (2004).
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
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
Latin American Financing Systems The traditional LA model The Brazilian model The Chilean model
Graph 1. Gini Coefficients by country 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Gini Coeff. Brazil St. Lucia Brazil Chile Bahamas Mexico St. Lucia T&T Barbados Jamaica
Loan Program Schemes Mortgage Type Loan Income Contingent Loan Schemes
Chile Full cost sharing Government subsidies Student loans
Graph 2. Chile: Enrollment increase 700 600 (Thousands) 500 400 300 200 100 Higher Education 0 1980 1990 2000 2005
Chilean Reform in the 1980s Diversification Deregulation Decentralization Change in financing mechanisms
Table 4. Private Rates of Return, late 1990s and early 2000s, by Country (annualized percent) Country Secondary Post Secondary University Barbados 3 7 10 Guyana 4 10 10 Jamaica 3 8* -- St. Lucia 6 34 22 T&T 6 21 21 Chile 9.7 -- 24.2 Mexico 6 -- 24** Brazil -- -- 20 *Rate of Return to tertiary education as a whole (includes university) **Chapman, 2003 Source: Martin Carnoy, 2005
Mexico Student loan program for private institutions
Brazil Expansion of private institutions
Table 5. Number of Institutions and Enrollment in Tertiary Education Institutions in Brazil, by Type, 1999. Type of Institution Numbe r Enrollment (thousands) %Total Enrollment Graduates (1998) Universities 155 1,620 68 195,000 Federal 39 421 18 50.906 State 30 265 11 35,701 Municipal 3 39 2 5,177 Private 83 894 38 103,256 Non-University Multiple Faculty 113 278 12 39,632 Public 102 84 4 11,032 Private 711 369 16 53,055 Centers for Technology Education 16 19 1 2,002 Public 16 19 1 2,002 Private 0 0 0 0 Total 1,097 2,370 100 300,761 Source: World Bank 2002. Higher Education in Brazil.
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)
Brazil Privatization Quality Assurance: PROVAO, INEA Accreditation Credit Programas de Credito Educativo 1999 Financiemento estudiantil (FIES) Distance Education
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