Private Sector in Latin America

National traditions have played a major role when it comes to favoring public or private sector higher education expansion.  For example, Argentina reached “universal” thresholds mainly through public sector enrollment, Chile (since the 1980s) mainly through the private sector. However, most of the region’s countries that are only half way or less toward a universal goal are today relying heavily on the private sector. At least, this is true for the two largest higher education systems—Brazil, which had long grown mostly through the private sector, and Mexico, which had historically relied more on public expansion.

The region’s increasing reliance on private higher education for access occurs through both the expansion of traditional and the emergence of new private forms. Especially the new private forms lack legitimacy in the eyes of many higher education leaders and much of the general public. But these reservations are mitigated by the convenience offered by this sector to reach enrollment targets as it is difficult to squeeze more money out of government budgets. In many cases, convenience trumps ideology.

Such issues were prominent among those discussed in an expert summit on Latin American higher education held on March 4-7, 2016 in Colombia. Several participants mentioned two usual suspects in explaining higher education diversification—demographic trends signaling a larger number of working age adults able to access higher education and structural resource constraints.

That controversy, even intense controversy, would accompany private growth is hardly new, but today’s battles take some new forms. This is striking as legally for-profit institutions open in some countries. Remarkably, now the private nonprofit sector joins forces with the public sector in reaction to the new private breed. Mentioning profit and education in the same breath upsets many stomachs in the education community. But in reality, many nonprofit institutions have long been generating revenues for internal use and many have crossed the line into corrupt, illegal profiting. Governments tackle this issue with at least two different, somewhat opposing strategies: going after those institutions allegedly involved in illegal activities or pursuing benefit from the situation by allowing these institutions to choose to become legally for-profit (and then collect taxes from these previously tax-exempt organizations). Brazil, Peru, and Chile (non-university level) are the countries that have most prominently embraced the latter option. Initially promoted by politically centrist or frankly neo-liberal governments, for-profits have not only survived but actually flourished under left-leaning governments. Brazil is the paradigmatic example. Instead of attacking for-profits, Luiz Inácio Lula da Silva’s administration (2003-2010) increased public funding for the private sector by making financial aid to students and tax exemptions available to for-profit institutions for extending access to youth from poor backgrounds.

But the discussion at the Colombia summit made clear that a reasonable analysis of privatization has to address counter-trends as well. Chilean public policy seeks to restrict the country’s robust public tuition policy imposed by the military government during the 1980s. A traditionally market-friendly country such as Colombia has mostly relied on the public sector for the most recent access expansion and has squelched plans to allow for-profit universities. To some people Colombia’s rapid public expansion has come as a surprise since this initiative was sponsored by the World Bank, an entity usually linked to the promotion of diversification through private sector involvement. However, the Colombian example shows that today, even when the public sector plays the leading role in expanding systems, it does so increasingly through new public management strategies, such as the promotion of modern managerial practices and diversification of funding sources; in short, such expansion may be considered public-private more than simply public in the grand historical tradition of full public funding and management.

Although highly controversial, new forms of private higher education have been used by both right and left regimes in Latin America. In today’s Latin America, thinking about and making public policy for higher education, especially access policy, inevitably includes private higher education. That this strategy sometimes holds even for left-leaning governments is striking. Yet we’d be kidding ourselves to think we’ve entered an era of left-right consensus about private higher education or the role of private activity. While some stakeholders battle to expand privateness, others battle to roll it back. Only time will tell, but the chances are that the private sector still has the potential to increase its enrollment share in those Latin American countries that have yet to progress from mass to universal participation.

Guest blogger Dante Salto is a National Scientific and Technical Research Council (CONICET) Postdoctoral Fellow at the Universidad Nacional de Cordoba (Argentina) and Affiliate at the Program for Research on Private Higher Education (PROPHE).