In Chile, the debate between free tuition and student loans has long sparked controversy. Behind this policy tug-of-war lies a complex intersection of educational ideals, social mobility, youth career choices, and the state’s fiscal capacity.
The country’s tuition-free university policy, formally introduced in 2016, opened the gates of higher education to students from the bottom 60% of income households. By 2018, the initiative was cemented in law through Higher Education Act No. 21.091, giving legal structure to what had previously been a political promise. The aim was clear: reduce economic barriers and provide equal opportunities for low-income students. But as with many bold reforms, the reality proved more nuanced.
For many students, free tuition felt like a liberation pass. No longer forced to weigh passion against paychecks, young people could now choose their fields of study based on interest rather than income potential. Artistic, humanistic, and social disciplines—often considered “risky” due to low employability—suddenly became viable options.
In Boston, for instance, Lily, the daughter of working-class parents, had long dreamed of studying biomedical engineering. But the looming cost of tuition almost drove her toward accounting instead—a “safe” major with a predictable return. Thanks to a state-level scholarship, she enrolled in a public university tuition-free, ultimately following her passion. The first few years were brutal, but today, she’s part of a cancer research team at a local hospital.
Stories like Lily’s are mirrored in Chile. Between 2015 and 2019, the proportion of students from low-income households enrolled in universities offering free tuition jumped from 40% to 60%. It was more than a statistical shift; it was a cultural one. University education was no longer an exclusive privilege of the wealthy.
But for many others, loans remain the only path forward. Chile’s State-Guaranteed Student Loan (CAE) system allows students to attend college—but at a cost. The burden of debt has shaped career decisions in ways that can feel limiting and impersonal. Students often opt for degrees that promise a good return on investment—business, law, computer science—regardless of whether they align with personal interests.
Take Daniel from Munich, for example. His dream was to become a writer. But facing the prospect of tens of thousands in student debt, he chose to study finance instead. Today, he works at a bank, wearing suits and crunching numbers. “Every day feels like I’m playing a part in someone else’s life,” he admits.
This tension is real in Chile too. Research shows that students who rely on loans tend to choose “safe” fields, while those benefiting from free tuition are more likely to explore less conventional disciplines. However, this freedom comes with risks. Students with free tuition are statistically more likely to drop out during their second year—particularly in fields like agriculture or services. Meanwhile, loan-bearing students, with more at stake financially, tend to push through.
Interestingly, this pattern reverses in social sciences and humanities, where tuition-free students show greater persistence. It suggests that the absence of debt can reduce the psychological cost of switching majors or experimenting with career paths—something loan-reliant students can rarely afford.
To address the growing dissatisfaction with CAE, the Chilean government recently proposed a new funding system called “Public Financing for Higher Education” (FES). The reform aims to replace bank loans with a state-run model and partially forgive old debts. While the intentions are good, the backlash has been intense.
Universities fear the loss of financial autonomy, as FES funding would be tied to enrollment numbers and performance metrics—often misaligned with academic values. For middle-class students, the concern is different: they’re too “rich” to qualify for subsidies but too poor to pay out of pocket. This group falls into a policy blind spot—excluded from support, yet strained financially.
Emily, the daughter of a high school teacher in Paris, knows this all too well. Her family’s income was just above the aid threshold, but nowhere near enough to afford tuition at the art school of her dreams. Instead, she enrolled in a local community college to study business administration. “It wasn’t my first choice, or even my second,” she says, “but it was the only thing we could manage.”
Chile faces a paradox. The country spends 5.9% of its GDP on education—one of the highest rates in the OECD. But the distribution is uneven: 2.4% goes to higher education (well above the OECD average), while only 1.7% supports primary and secondary schooling. As a result, preschool infrastructure is fragile, learning outcomes are stagnant, and dropout rates in basic education are rising.
Can it really make sense to prioritize university financing reform while the foundations of the education system are crumbling?
Education is not a product, and universities are not factories for job-ready graduates. True education enables self-discovery and social transformation. Policy success shouldn’t be measured solely by enrollment statistics or employment figures, but by how well it serves real students, especially those left out by the system.
Fair education doesn't mean one-size-fits-all. It means building bridges—tailored, flexible, and human-centered—for students from all walks of life.