Chilean free education

This post is on the controversial topic of how to provide with free university education in Chile. As to what is “free” there are different ways as to approach this subject. The current government’s idea is (which neither they have a clear idea as to how to make it happen so I’ll try to explain as best I can what I think they’re aiming for) is that if the student goes to a certain group of universities, his/her first career studies are paid for by the university (which is being paid by the government). This idea sounds very good in the way that any person who wants to study can study. The problem that I think arises is a bit of the eternal student that some countries with this study approach have. From what I understand, Germany and Argentina have a free education (or mostly in the case of Germany) system up to college (excluding postgraduate degrees). Here comes a bit of hearsay and reading online (yeah, Internet never lies, but if one thinks about the system on itself it sounds possible). The problem with these systems is that students don’t have incentives to finish their studies. They can study as long as they want and as many careers as they want. Thus students in an extreme case never enter the workforce.

Here comes my first analysis of this educational system:

  1. This educational system on itself is not bad thing on itself, but economically speaking money is a limited resource, and universities need to be paid for each career a student undergoes. Who pays the university? The state with taxes. Who pays taxes? The workforce with a certain threshold income (minimum wage and slightly above don’t pay direct taxes). If each year no student joins the workforce, and each year old people leave the workforce, how is government tax money renewed so as to pay future generations?
  2. If a student undergoes multiple careers, the government MUST pay for each career. Probably all these studies create an over-qualified entry level worker which no one wants, thus creating unemployment from the start (I don’t know if this is a real issue, but I would think it is for entry level jobs that don’t need to many qualifications or a minimum). This creates an increased money vacuum compared to 1. Usually 1 student studies 1 career, enters the workforce and 1 person leaves the workforce. Thus a balanced is maintained. But if a student studies 2 careers and only 1 leaves the workforce, there is a deficit of 1 person to maintain the income/expenditure balance.

After this analysis, so as to keep a “balance” of sorts between people entering the workforce and people exiting the workforce (due to age or illness) there should be an incentive to work and not keep studying. In my opinion free education (or in a transparent manner) is a very good thing as long as you have the aptitude for it. This aptitude is measured with a certain entry test (I’m not going to go into this topic as PSU, or PAA tests measure the amount of time/money you can shell out to prepare and not knowledge or skills per se). Therefore when a student wants to study, they get an immediate full scholarship (just like in the amount of a free education) to study whatever career they want. They can take as long as the average student takes and not the amount the career really takes (this is a small money sink but I’ve only heard of few people that finish in the allotted time). For example “Ingenieria Civil en Informatica y Telecomunicaciones” in Chile’s curriculum has an average duration of 11,4 semesters (some universities have a 5 year program and others 6 years program, thus the average). The real amount of time it takes is of 16,6 semesters in average (8,5 years approx). All according to the governments webpage. Thus the student can study with the governments money for 16,6 semesters unhindered. If he changes career paths, he gets a debt of the studied time but can re-study for free another career. If the student finishes this career they pay nothing from this finished program. They only need to pay for the unfinished career so as to give back to the pool of students. For those that finish before the program’s time (in this case 11,4 or some number in between the program’s average and the real average) they get some cash incentive so as to pay another career or pay the debt they incurred of the unfinished program. Thus, the money sink generated is only 1 career per student, an incentive to finish as fast as they can so as to get some money back (and keep the average in an acceptable range) and join the workforce so as to keep the taxes getting paid so as to have students being able to get this full scholarship (if free education for all is the way to go).



TL;DR (too long; didn’t read):

  • Current government isn’t generating incentive to finish studies. Thinking that people will not study forever on tax money
  • Current system is a money sink with no end to it
  • Proposed system that even though is a money sink, incentivates (forces) people to finish one career and if they finish before a certain threshold, get credit to pay of unfinished career or future studies (ex: another career or a postgraduate degree?)