Laureate-affiliated universities under fire in Chile

Launching a far-reaching investigation into profit-making by private universities will be top priority for Nicolas Eyzaguirre, who is due to become Michelle Bachelet's education minister when she is sworn in as Chile's President on 11 March.

Professor Victor Perez, rector of Universidad de Chile - the country's largest public university - has repeatedly summoned outgoing minister Carolina Schmidt to carry out 'a formal and in-depth' enquiry into the way America's Laureate Education Inc entered and operates in Chile.

Finally, on 19 February, Schmidt announced that she would be investigating four universities, on top of two other processes that were already underway.

The universities include two of Laureate's affiliates - Universidad de las Americas or UDLA, and Universidad Andres Bello or UNAB - which are suspected of having violated a law that forbids profit-making in higher education.

Perez dismissed the action, saying it had come too late and did not go far enough. Last year, Schmidt's predecessor lost his job over the same issue.

Resistance to profit-making

Ending profit-making in the educational system is one of the main banners of the student movement that rocked Chile with massive demonstrations in 2011.

Hence, ending profit-making features prominently in the educational reform that Bachelet will be tabling during her first 100 days in power.

Laureate's UDLA application for accreditation was turned down last October by the National Accreditation Commission. The university appealed to the National Education Council, or CNED, and also lost.

CNED raised doubts over the pertinence and value of its operational and educational contracts with Laureate and said payments to the US for-profit education company may make it financially vulnerable.

'The amounts paid for these contracts - though they are at market prices - are substantial, especially considering that students and teachers have hardly used them,' warned CNED.

UDLA finances have improved in the last three years, shored up by earnings derived from state-backed student loans. It has now lost this source of income, however, since the revocation of its institutional accreditation make its students ineligible for government loans.

The university's student-to-teacher ratio also conspired against its reaccreditation.

In 2013, UDLA had 34,436 undergraduate students, up from 25,272 in 2010 but its full-time teaching staff went from only 231 in 2010 to 235 in 2012 while its number of part-timers went down from 177 to 164.

The university said it was planning to re-apply for accreditation, but it must wait for two years before doing so.

With more than 40,000 students, UNAB - Laureate's other university in trouble - is even larger than UDLA. In 2013, the National Accreditation Commission cut back its accreditation from five to four years and detected transfers of several million dollars to Laureate.

'The web of the US Securities and Exchange Commission has information that [Laureate] has purchased UNAB's trade mark and the students. Is the [education] minister investigating this issue?' asked rector Perez in an interview with El Mercurio, Chile's leading daily.

Ricardo Escobar, strategic adviser to Laureate in Chile, told University World News that Perez's 'allegation ignores the fact that since Laureate came to Chile in 2001, it expressed its intention to act as a foreign investor in order to administer and offer services to universities and other educational institutions.

'All Laureate's applications have been approved by the Foreign Investment Committee and six contracts with the Chilean state have been signed to date. Laureate has always acted with transparency, respecting the prevailing legislation,' he added.

Government stymied?

Incoming minister Eyzaguirre will find it difficult to take swift measures regarding profit-making in higher education because the inspection and sanctioning faculties of the Education Ministry are insufficient and not clearly defined.

In an effort to shore them up, in 2011 the outgoing Pinera government tabled a bill creating 'superintendency of higher education'. The bill is stagnating in parliament and will be thoroughly revised by Bachelet's government.

In the meantime, her administration will have to look for other ways of dealing with the profit issue head-on in order to avoid marches by angry students and protests by disillusioned citizens.

'Eyzaguirre cannot look sideways concerning this issue,' says Juan Manuel Zolezzi, vice-president of the Council of Rectors.

'If there is profit-making in some universities, they have to be sanctioned...The new government will have to ask for faculties to do so; if it doesn't, we won't stand idly by.'

Laureate Education Inc is a global education network providing educational and management services to over 70 higher education institutions worldwide. Former US President Bill Clinton is its honorary chancellor.