Innovations in the financing of education : the case of Chile

The purpose of this paper is to document recent reforms in the administration and financing of education in Chile and to describe how they have been implemented. In primary and secondary education, the reforms consisted of decentralizing public schools by transferring them to municipalities and by encouraging the private sector to operate subsidized tuition-free schools. In higher education, the reforms consisted of allowing the private sector to create higher education institutions, raising tuition fees in public and private subsidized universities, introduction of student loans to needy students and a per-student payment for transferring public funds to universities. Although it is too early to say whether or not the reforms have succeeded, the paper makes several conclusions. Firstly, these well conceived and planned reforms have faced several implementation problems. Secondly, although the per-student payment system has worked well in primary and secondary schools, it has not done so well at the university level. Lastly, the private sector has responded rapidly to subsidized tuition-free schools and higher education institutions; tuition in public and private subsidized universities has increased; and student loans now constitute a large part of university financing.