SciELO - Brazil - Will the invisible hand fix private higher education in Latin America? Will the invisible hand fix private higher education in Latin America?
The essay discusses the strengths and shortcomings of private higher education in Latin America. It argues that private institutions play an important role and shows – with numbers – that profits and quality education are unrelated. In discussing regulations, it argues that both neglect and heavy-handed policies are not producing the expected results. What less prosperous and smaller private institutions need is public support, in order to offer decent quality education and innovate in non-traditional areas, such as post-secondary programs. Indeed, they need help to structure courses, prepare teaching materials and train their teachers. Standard economics would lead us to expect the market to adjust. After all, the owners of these schools are supposed to be rational economic operators. They are expected to offer the students the programs that would bring them the best possible job possibilities. If they do it right, they would derive maximum benefits from their investments, since more students would enroll. Public; Private; Higher education; Universities; Postsecondary education; Liberal arts; Diversification; Technical education; Profits; Quality; Regulation; Accreditation; Authorization; Training of teachers; Teaching materials In fact, their weakest programs are less weak than some public universities. It appears that their internal rules have been more effective in prunning the bad apples. However, some rules also prevent them from rising above levels that remain quite modest. O ensaio discute os pontos fortes e as fragilidades do ensino superior privado na América Latina, defendendo a posição de que tem um papel importante.
Os números sugerem que lucro e qualidade acadêmica não estão correlacionados. No que tange à regulação, defende a posição de que nem liberalidade total e nem controles pesados produzem os resultados esperados. O que as instituições pequenas e modestas precisam é de apoio público para oferecer uma qualidade correta e inovar nos cursos menos tradicionais, como os tecnólogos. De fato, precisam de ajuda para montar os cursos, preparar materiais educativos e treinar os professores. Este artículo discute las fortalezas y limitaciones de la educación superior privada en América Latina. Argumenta que las instituciones privadas juegan un papel importante y muestra, con cifras, que el lucro y la educación de calidad no están correlacionadas. Al discutir las regulaciones, el artículo sugiere que tanto políticas basadas en fuertes controles, como las que adoptan estrategias extremadamente liberales dejando al mercado que opere por su cuenta, han fallado en producir los resultados esperados. Lo que las instituciones privadas pequeñas y menos ricas necesitan es apoyo público. Esto con la finalidad de ofrecer educación de calidad y de ser capaces de innovar en la forma de cursos no-tradicionales, como en el caso de diplomas cortos en carreras tecnológicas. El apoyo es necesario, de hecho, para estructurar cursos, preparar materiales de enseñanza y entrenar a los profesores. Infrastructure is, on the other hand, only one of several paths traveled by private institutions in their relentless search for respectability. In countries where this is allowed, probably the most common gimmick is the adoption of the label “university”, regardless of any consideration for what it might mean. It is believed that much of the suspicion will subside, just because the name of the establishment is changed.
Table 2, in turn, looks in more detail at the evolution of enrollments in NUI in four countries. As it can be observed, the share of NUI enrollments in total private enrollments is high and growing in all cases, unless Chile can be counted as an exception, for going from 100 percent (all NUI in the private sector in 1994) to 94. 4 in 2010.
If there is a generalization to be made, it would be that, in Latin America, a substantial majority of private students are enrolled in non-university higher education institutions, and most are private11 11 A clearer exception is Mexico (not included in the table, given difficulties in obtaining recent data), where a strong governmental support for higher education has never faltered, and non-university tertiary education has been kept mainly public. . There is a mismatch between the highly abstract and theoretical material contained in the curricula and the low capacity for abstraction of the students, victims of low quality K12 education. The abstractions in Economics, to cite an example, are particularly removed from everyday life and the teachers tend to be unable to bridge this gap. Management tends to be a succession of techniques/theories that are never applied in concrete examples during the course of studies. Rarified pedagogical theories are hardly understandable. In the early years of the new Millennium, Brazilian officers of the Ministry of Education, as well as the left, feared a takeover by the aggressive American for-profit universities. One Minister proposed restrictive laws against the presence of foreign “capitalists” in the sector (but nothing came of it, since it was part of a broader legislation that met fierce opposition). Ironically, this wave of internationalization did not happen, even though some American institutions came and purchased several private four-year colleges. Why the roar of the lion was not followed by carnage? Mostly, for two reasons.
The first is that there are not that many such private for-profit institutions around the world. They are either American or Australian. The latter are geographically too removed and busy with the Far East markets. Big American institutions are no more than three or four (Phoenix, Laureate and DeVries are the largest and already in the country). Making it hard to obtain initial authorization, but then forgetting about controls, once licensing is completed. This happened in Brazil. Público; Privado; Educação superior; Universidade; Educação pós-secundária; Diversificação; Educação técnica; Lucro; Qualidade; Regulação; Acreditação; Autorização; Treinamento de professores; Materiais de ensino
The other side of the equation is also riddled with shortcomings. The institutional weaknesses of the Latin American governments are severe and extend to most countries in the region. Public bureaucracies may not have the capacity to spot the right opportunities for intervention. It makes more sense to focus in programs that provide generic support for initiatives and certain lines of action. Picking this or that institution as the “right” one is far more perilous. Perhaps, general rules that would force institutions to improve themselves as a requirement for support are a good idea. An example along this line of thinking was an Interamerican Development Bank loan to non-university tertiary in Argentina.
In order to receive funds for academic improvement, institutions had to associate themselves with business or local governments and prepare joint projects, thus making it more likely that the connection between education and economic needs is right24 24 Although severely downsized as a result of the economic crisis in 2001, the project, known as Presnu, ended up accrediting 17 new technological institutes and 43 new diplomas well attuned to private sector demand for skills. The goal of setting up these new institutions through public/private sector partnerships in the provinces, as well as the goal of managing the licensing and accreditation process with high technical standards and transparency was fully accomplished (BANCO INTERAMERICANO DE DESARROLLO. Informe de terminación de proyecto: programa de reforma de la educación superior técnica no universitaria Argentina. Washington, DC, 2008. [Mimeo]. ).
Several of the institutions originated in the context of this project continue to exists and prosper almost two decades after their inception. . Despite some imperfections and unresolved technical issues in the tests, they provide a way to determine how much of the curricula students from different schools have mastered. The tests are professionally prepared and, certainly, far better than what teachers use to grade students and determine whether they reach the levels required for graduation. Overall, they generate very robust numbers. However, the curves also show that IPOs institutions are a different breed. While their mean scores are insignificantly better, the variance between the schools is much smaller. They do not inhabit the high end of the distribution. But even more striking, they are a much more homogenous group with no truly weak institutions among them. Just about everybody proclaims the vast superiority of public over private institutions. The reality is not as black and white. As the numbers show, the mean scores of the public sector are somewhat higher. However, one cannot simply say that the public institutions are good and the private ones bad, because there is much overlap between the two curves. Indeed, the difference between means is quite modest, suggesting that the categories are more equal than different.
The accompanying box diagram summarizes the numbers (the top and bottom lines in each box represent, respectively, the means of the top and bottom quartile. The wider apart they are, the greater the variance). Other interesting initiatives are the post-secondary programs of the Brazilian Senai, combining state-of-the-art technical education with R&D and technical assistance to enterprises. Most of these schools offer vocational training, two-year postsecondary programs, skip undergraduate degrees and operate non-degree post-graduate programs. They are private institutions, belonging to the Federations of Industries and funded from a levy on the payroll – in that sense, they are not pure bred private institutions.
Be that as it may, they are very important as bellwethers of a new line of technical institutions very closely connected to industry and targeting specific industries, rather than following the more common “polytechnic” model. Rather than schools preparing labor for the market at large, they are technical centers to support enterprises, with a wide range of services in which technical courses are one of the offerings. This essay discusses the strengths and shortcomings of private higher education in Latin America. In particular, it questions the ability of less prosperous and smaller private institutions to offer decent quality education and innovate in non-traditional areas, such as short post-secondary programs. It argues that private institutions are welcome at all levels. However, with some exceptions, they need support from the public sector to structure courses, prepare teaching materials and train their teachers. At this juncture, we need to clarify some confusion in names. Post-secondary programs lasting between two and three years have a wide variety of titles in Spanish and Portuguese, depending on the country: “University colleges”, “Technological Institutes” and many others. They stand as clearly distinct from the traditional diplomas earned in programs that last between 4 and 5 years.
For the sake of this article, we will refer to these shorter degrees as “non-university tertiary institutions” (NUI)8 8 More formally, the degrees offered by NUI square with the official Unesco definition of Isced 5B (for International Standard Classification of Education), understood as study programs that are “[…] generally more practical/technical/occupationally specific that ISCED 5A programs” (conventional university diplomas, CdMC-JCN). They typically take between 2 an 3 years to be completed (UNESCO, 2010). . The last and the most problem-riddled category of second tier private institutions is made up by the fuzzy and ill-defined technical short careers, here referred to as NUI.
In many ways, there is a huge unfulfilled potential in these programs – as illustrated by what happens in the industrialized world. Most of these courses cater to technical careers that previously were offered at secondary level. Until recently, they did not exist at all. They issue diplomas as technologists, associate degrees, operational engineering or whatever other term is fashionable at the moment. They are sometimes reluctantly accepted as higher education. Administratively, they belong to the “post-secondary” or “non-university tertiary” limbo. As an overiding issue, lies a question mark about the ability of the market to lead to desirable solutions, for those involved and for society. Does the “invisible hand”, mysteriously driving market forces, lead to the best of all possible worlds? As argued, this is not always the case. The title of the paper is a reminder of this broad query.
4.2 High-end post-secondary technical schools
The fact that the costs are low leads directly to the discussions about quality. From the very beginning, there has been an issue on whether low costs are an indication of healthy administration and internal efficiency or rather the sign of an unavoidable low quality. Let us consider the facts. First, it is important to realize that the world is bound to be a mixed bag. Some private institutions produce graduates that compete successfully in the market with the graduates from traditional institutions. If they do that at lower costs, then efficiency is clearly the right answer. In addition, earnings functions typically show that degrees from these institutions have a significant market value (even if generally not as high as a top university degree). This seems to imply at least a minimum of value added in the education offered by these institutions. The authors believe that the low end of the private higher education sector can perform a valuable social role. After all, they deal with the less academically endowed and the less affluent students to reach post-secondary level. Yet, by itself, the sector is unable to develop the requisite courses, the training materials or the instructors that are required to implement this role. Hence, the participation of the public sector is indispensable. Rigidity in curricula and legislation. Very often, official curricula are inflexible and obsolete. Most of the changes required to have high-performance courses in technical areas would collide with the existing legislation and official curricula. There are known loopholes, but these institutions often lack the courage to use them, out of fear of reprisals.They also lack the status and the self-confidence that allows the big and famous institutions to challenge or break the rules with impunity. Público; Privado; Educación superior; Universidades; Educación post-secundaria; Diversificación; Educación técnica; Lucro; Calidad; Regulación; Acreditación; Autorización; Capacitación docente; Materiales de enseñanza Be that as it may, given the public budget restrictions – that are not likely to alleviate in the near future -, it is the private sector that grows faster, just about everywhere. Overall, it is safe to assert that private education is becoming larger5 5 In Brazil, the private/public proportion has stabilized around 75 of enrollment. . The second reason is that aggressive Brazilian capitalism moved faster and occupied the market. Some brought in foreign venture capital. But while these funds might invest in Education, they have no particular expertise or interest in the area. Therefore, they bring funds, audit the accounting and do little more. In matters of Education, they show no interest. Lack of deep pockets to launch new courses with new occupational profiles. In an innovative course, the first promotions will be thin and reticent. The school could hardly break even in a couple of years and these modest operators do not have the financial resources to operate for long on the red. This essay contends that NUIs are the number one problem in the lower tier private education. These are the less prosperous and less sophisticated of all higher education institutions. And their students belong to the lowest social strata to reach higher education. Since they are seen primarily as second – or third – best substitutes for university education, they become, by default, the pick of last resort for any prospective student. Worse, they get little respect from society and little support from the government. Thus, the public-private divide is clearly not a quality divide in many countries. If reputation is a guide, countries seem to be all over the place when it comes to the relative prestige of private vs.
public. Public opinion, in some countries, clearly consider the private institutions as better than the ostensibly mismanaged and underfunded public. Yet, in others, the opinion goes exactly in the opposite direction. Hard evidence, on these matters is very hard to come by16 16 A potentially major source of data, the OECD-originated Ahelo (Assessment of Higher Education Learning Outcomes) project, was discontinued in 2015, after a technically and substantively promising test run. Its ambition of developing standardized measurements of education quality for higher education programs – a PISA for higher education, to some extent - was left without support from most of the leading universities of the world. . Yet, it is not only in extreme and idiosyncratic cases that the profit motive is seen as an illegitimate and a poorly veiled force behind the curtain. This, despite the fact that, there is meager evidence to accept or reject such overarching accusations. In Latin America, from the eighties on, the responses to rapidly increasing demand for post-secondary education lead to the expansion of existing institutions – sometimes to gigantic proportions. But also to the creation of a whole set of new institutions able to accommodate a far more diverse student body and willing to offer entirely new types of academic programs in new institutional settings. To a large extent this was done through a fast expansion of the private sector.
As expected, the patterns are quite different depending on the country. In some, as in Brazil, the private overtook public enrollments. By the mid-nineties, the Latin American scene was synthesized as “[…] many more institutions, many more types of institutions and many more private institutions than what the region used to have just a couple of decades ago”2 2 NAVARRO, J. C. An agenda for research in higher education in Latin America: exploring the consequences of diverse disciplinary perspectives. Cambridge, 1995. [Mimeo]. . There are still other paths, such as the hiring of a few star professors retiring from traditional universities, in order to establish a small but top level research and doctoral unit in a narrow field, which stands in stark contrasts with the mass production of certificates in the rest of the institution. However, the hard facts of costs make this the only viable solution for quality graduate studies in private education. An academic Master or Doctorate costs far more than students can afford to pay.
Therefore, in order to have good programs, they must be limited and the deficits funded from the revenues of a large undergraduate enrollment. While there is nothing wrong with this solution, there is scant, if any, evidence that these programs will have any positive impact on the teaching quality at the undergraduate level19 19 A lack of recognition of the necessary diversity of institutional missions across the higher education systems has led in some cases to make scientific research mandatory for all institutions, forcing universities that should be focused on the improvement of teaching to spend significant resources in one or two particular lines of research, with only the weakest of links with the core activities and mission of the institution. . They may bring prestige and attract better students but do not improve teaching. There are, at least, two different models that would be far more appropriate for them.
The first, relevant for low-end universities, would be a tuned
down and more practical general education program. It is a fact
that most of the students will not become economists or
psychologists, regardless of the institution they enroll in.
However, they can surely benefit from four or five additional years
of attending higher education courses. This much is clear. The
critical issue is how to target this general education to the
scholastic profiles of the real students. We contend that to
achieve that, the teaching should be less abstract and less
ambitious.
Why would that be? Whatever the reasons, the data show clearly that declaring a profit motive is unrelated to academic quality. The concentration of the academic courses in the social sciences, which do not require the expensive laboratories of natural sciences and engineering, is claimed as another reason for the difference.
This is indeed very much the case. But there is another side to this story, which is the advantage of being free from civil service rules and teacher unions that affect public institutions. All this has been well established in the literature for quite some time: Sanfuentes (1990)SANFUENTES, A. Políticas económicas para la universidad. Santiago: Instituto Latinoamericano de Doctrina y Estudios Sociales, 1990. described a consistent pattern of lean administrative staffs in Chilean private tertiary institutions, which seems to be consistent with information from Brazil’s private sector (TRAMONTIN; BRAGA, 1984TRAMONTIN, R. ; BRAGA, R. O ensino particular no Brasil: traços de um perfil. In: MENDES, C. ; CASTRO, C. M. (Orgs. ). Qualidade, expansão e financiamento do ensino superior privado. Brasília, DF: Associação Brasileira de Mantenedoras de Ensino Superior, 1984. ), as well as from Venezuela (BRUNNER; WOLFF, 1992BRUNNER, J. J. ; WOLFF, L. Higher education in Venezuela: issues and options for reform” In: WOLFF, L. ; ALBRECHT, D. (Eds. ).
Higher education reform in Chile, Brazil and Venezuela. Washington, DC: The World Bank, 1992. ). These findings remain unchallenged and valid today. This essay attempts to avoid such a priori positions. The fact of the matter is that, both private and public institutions may offer an education of debatable quality. Looking now at those that have had IPOs, we also find that the performance of their students is not inferior. Surprise! In fact, they show an ever-so-slight superiority to others from the private sector. The proximity to bankers and their rates of return is not so deleterious to education, after all. These results put to rest the “holier-than-thou” attitudes of some philanthropic institutions, sneering at their for-profit and IPO counterparts. Whatever the inner logic of open capital institutions, it is clear that, on average, it does not hurt quality. We can also use the data to correlate academic achievement with quality of infrastructure, proportion of faculty on full-time contracts, proportion of teachers with Master Degrees and the proportion of teachers with Doctorates. The results are no less striking.
To make a long story short, none of these four indicators show any significant correlation with academic quality. In other words, students do not learn more in institutions with a higher proportion of Masters or Doctors. Also, more full-time faculty does not bring any academic advantage. As it can be seen in Table 1, by 1994, in terms of enrollments, private institutions already constituted a sizable proportion of higher education in all the countries considered. Yet, in the 15 years that followed, the expansion of private enrollments, far from stabilizing, continued at an unrelentingly fast pace. By 2010, private enrollments had more than tripled across all the systems considered, and this led to an expansion of the relative share of enrollments in 5 out of 7 countries. Peru represents the exception, due mostly to a proliferation of regional public teaching colleges.
From the seventies on, demographic pressures have been driving basic education systems in Latin America, creating a rapidly expanding demand for tertiary education. This is a classic situation: The more students finish secondary, the greater the pressure to expand enrollment in higher education. Since the graduates, at least initially, are predominantly from the middle classes, their ability to translate this demand into political pressure is well known. And, one way or another, governments yield to the pressure. Lack of deep pockets to launch new courses with new occupational profiles.
In an innovative course, the first promotions will be thin and reticent. The school could hardly break even in a couple of years and these modest operators do not have the financial resources to operate for long on the red. Beyond the general picture that can be drawn from the figures presented above, how do private institutions of higher education in Latin America look like? On this, an early appraisal from Balán and García de Fanelli (1997)BALÁN, J. ; GARCÍA DE FANELLI, A. M. El sector privado de la educación superior. In KENT, R. (Org. ). Los temas críticos de la educación superior en América Latina. Mexico: Fondo de Cultura Económica, 1997. V. 2.
concluded, in way that is still worth quoting at length: With so many the new institutions being created, the reaction suspicion clouded the air and, very often, open criticism against their alleged bad quality. Indeed, in some cases, the proliferation of ostensibly inadequate private institutions took place, adding to the general mistrust towards the private sector. The case of El Salvador is a good example. As described by Bernasconi (2008)BERNASCONI, A. El sistema de supervisión y mejoramiento de la calidad de la educación superior de El Salvador: estudio de caso. In: SEMINARIO EDUCACIÓN SUPERIOR Y CIENCIA Y TECNOLOGÍA EN AMÉRICA LATINA Y EL CARIBE: RESPUESTAS FRENTE A LA EXPANSIÓN Y A LA DIVERSIFICACIÓN; 2008; Fortaleza. Fortaleza: Banco Interamericano de Desarrollo, 2008. , the country went from having two universities in 1976 to 32 by 1994, an outcome closely linked to lax enforcement of regulations, as a result of political polarization and the civil war3 3 Post-conflict regulation, starting with a new higher education law in 1995, allowed the closing of the most egregious examples of abuse and led to a rapid recovery of the average quality of the system, even though it remains one with high private participation (Bernasconi, 2008).
. In addition, even though the public institutions have somewhat higher means, both the private for-profits and the not-for-profits also have some outstanding examples of quality education. The essay begins with an overview of higher education in Latin America. Privatization seems to be a trait in countries that are latecomers in higher education. Perhaps, Latin America has pioneered in this expansion. In fact, it displays the same high growth in the private sector observed in Far East nations. This essay proposes that neither the usual controls nor neglect are the solution for the lower end of private higher education. Instead, some degree of support for NUIs seems to be in order. Low-end four-year programs, as well as 2–3 year programs, lack technical expertise and can benefit from support, in the form of teacher training and materials. Nevertheless, education authorities have done very little along these lines.
Implementation challenges, however, should not deter governments
in Latin America from the overdue need to support the academically
weaker lower tiers of private higher education. The simple reason
is that governments learn by doing. Even if they are clumsy at the
beginning, practice tends to improve performance.
There are known loopholes, but these institutions often lack the courage to use them, out of fear of reprisals. They also lack the status and the self-confidence that allows the big and famous institutions to challenge or break the rules with impunity. The non-profit status of most private establishments leads to practices of disguised distribution of profits, a phenomenon common to Latin America and other parts of the world. Some institutions charge a high tuition and offer very little value for the money. The owners distribute the profits as high salaries for the executives and perks.
Also common are mechanisms to outsource, at high costs, services such as janitorial or computing, to private firms belonging to the owner of the school. All of this really happens. In some cases, there is hard data, in others, one can find believable but not rigorous evidence. Brazil constitutes the obvious case study because reliable and universal measures of school achievement exist for graduates of four-year programs. No other country has such indicators. In the mid-90s, the Ministry of Education created what was then called the provão, a test applied to graduating students, covering the core subjects in each career. Mean results for each institution are transformed into a grade. The system has gone up and down but it remains in place and yields very useful and powerful results.
The first question answered by the data, in the context of our discussion here, concerns the relation between private ownership, profits and academic performance of students in each category. One of the authors undertook an analysis of a modified version of the original data basis and the results are summarized below. We begin by comparing public universities (most are Federal), private not-for-profit institutions, regular for-profits and a fourth and new category.Beginning in the year 2003, some of the bigger schools partnered with banks to open their capital (in technical jargon, to made Initial Public Offerings, or IPOs). As of this day, four have offered IPOs. Since they have been aggressively buying small and large institutions, in order to grow fast, the figures for programs belonging to institutions with IPOs had reached 23 at the time the data were collected (2009). Hence, the fourth category is “open capital for-profit institution”. The numbers confirm some assumptions but destroy a few myths (Graph).
Source: https://www.dges.gov.pt