MercoPress. South Atlantic News Agency

Chile begins implementing education reforms demanded by massive student protests

Chile’s Education minister, Harald Beyer making the announcement

The state, not banks, are to fund higher education scholarships through the creation of a new specialized government agency, Chile’s Education minister, Harald Beyer, announced in a press conference at La Moneda on Monday.

“In practical terms, this means that the funds originate from the state and banks cease to fund higher education,” Beyer said.

This proposal fulfils one of the biggest requests of Chile’s student movement, which last year saw massive demonstrations with thousands demanding free quality education.

The Eucation minister met with President Sebastián Piñera in the presidential palace to present a package of reforms, which includes the exclusion of banks from the scholarship system in exchange for a single system of state-provided credit; changes in the requirements for scholarship access for poor students; and a new means of financing the gap between actual and reference tariffs, which are projected figures for the cost of a degree, as well as a better system of calculating reference tariffs.

“We want a more just system with no discrimination and more equality that integrates scholarships and loans for all students of higher education,” Beyer said.

Under the old system, banks facilitated the access of the middle classes to private universities through the Crédito con Aval del Estado (CAE), a program of state-guaranteed credit, established in 2007. The loans came with an interest rate of almost 6%, three times what some public universities charge their students through their internal loan systems.

This situation resulted in students graduating from university with large amounts of debt. Estimates place the number of students currently in debt through this system at 350,000. These students supposedly accrue an average of 100.00 dollars each by the end of their studies.

The new credit system will be administered by the government and have a single interest rate of 2% a year. This will be the case for nine out of 10 students from both private and public institutions, excluding only the richest 10%.

This change in the system will ensure that funding goes directly to students without involving third party institutions such as banks. With this new reform, recipients of the loans will only have to pay the money back once they start earning. Bayer said the payments will not exceed 10% of the student’s future income.

In Chile there is a point system based on the University Selection Test (PSU) for access into university. With the new reforms the requirement for merit-based grants and scholarships will also now depend on the socio-economic background of the student.

The current requirement of 550 points for a scholarship will be lowered to 500 for the poorest quintile of students and 525 for the next poorest fifth, allowing greater opportunities for access. This measure would be applied this coming academic year in 2012 for first year students and could benefit more than 15,000 students.

President Piñera was positive about the announcements and hinted at further reform to school and pre-school education that shows the government’s commitment to change at all levels of education.

“If we are talking about extending preferential school grants to the middle class then we should also talk about adding a second pillar to this educational reform, which is the reform of school education,” he said. ”If you add our commitment of 100 percent grant coverage and free education to vulnerable students from the middle class to a preschool level, then we have reform at all levels of education. This will be the task of the Minister.”

Both grants and loans provided by the government in Chile cover the cost of a reference tariff, however, in many institutions the actual fees often exceed this estimated amount.

The state and educational institution, according to Beyer’s announcement, will now split the cost of the gap between the actual and reference tariffs - a figure that was previously paid for by the student themselves. This co-financing would be gradual, however, with a total payment of the tariff gap for poorest students first while middle-income students will receive a smaller amount toward covering this cost.

The minister’s reforms also spoke of a new way of calculating reference tariffs, taking into consideration the student's socioeconomic background and characteristics of their degree, its duration, and the rates of employment after graduation, to create a fairer system more in line with the reality of the quality of education offered.

The call to abolish the CAE system was one of the main slogans of Chile’s student movement last year that with more than 40 massive street protests seeing the resignation of two ministers of Education.

The proposal has yet to be discussed in Congress and for this reason student leader Gabriel Boric gave a cautious response to the news.

“We have to study this proposal in detail - we are somewhat accustomed to the 'small print' of the government - but it seems that there is a positive reaction,” the president of the Federation of Students of the Universidad de Chile (FECH) told Chilean press. “The government is clearly action following the demonstrations of last year.”

By Olivia - The Santiago Times