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You are here: Home > Products > Federations Magazine > June/July 2007 > Tax Measures Help Needy Students

special section: post-secondary education - brazil

Tax Measures Help Needy Students

Three-quarters of students attend fee-charging private institutions

By Jacques Schwartzman

REUTERS/Bruno Domingo

Claudia Magalhaes, a teaching assistant at the Federal University of Rio de Janeiro, arranges a model of the Amazonsaurs maranhensis dinosaur, whose 110-million-year-old remains were found in the Amazon forest by researchers at the university

The wide gap between rich and poor in resource-rich Brazil plagues this nation in many fundamental ways – including its system of higher education.

Brazil is a federal republic with 180 million people living in 26 states plus a federal district in which are located the national capital of Brasilia and the headquarters of the three branches of power – the legislative, executive and judiciary.

Power is largely centralized under Brazilian education law. There is little state autonomy.

Brazilian higher education reflects inequality, with students from privileged families far more likely to attend its elite universities. One of the key challenges is how to attain greater equity in higher education in a large and complex federation without sacrificing quality.

Brazil has developed an innovative way of partly remedying the inequity issue by offering tax relief to privately-owned non-profit institutions, which in turn offer discounts or scholarships to financially needy students. Eventually, this may be available to 400,000 students – about 10 per cent of
post-secondary enrolment in Brazil.

There are about 2,000 higher-education institutions in Brazil. Roughly 10 per cent of these institutions are public and are attended by about one-quarter of all post-secondary students. These are mainly universities, created and funded by governments, offering free education. The other 90 per cent of institutions are private, mostly colleges and university centres (polytechnics), where the remaining three-quarters of students are enrolled. This private sector includes community, non-profit, religious, and philanthropic institutions, with significant participation by the local authorities as well as by private, for-profit entities. An important difference between community and other private institutions is their tax status. Community institutions are free from income tax, social charges, and other contributions. Non-profit private institutions may be exempt from income tax only.

The federal government involvement in education is primarily in the field of higher education. It is responsible for very little at other levels of education. Thus, Brasilia funds 87 federal institutions of higher education. States in Brazil have primary responsibility over elementary education and set priorities for high schools. The states also fund and maintain 75 institutions of higher education, including 32 universities. Municipalities are also involved, funding 62 higher-education institutions.

Constitution Guaranteed Education Funds
The Federal Constitution of 1988 contains guidelines for all public institutions – federal, state, and municipal. Public universities must link teaching, research and extension services and provide tuition-free education in official establishments. The constitution requires the federal government to spend at least 18 per cent of tax revenues on education at all levels. Education spending by states and municipalities must equal at least 25 per cent of tax revenues. The Federal Constitution states that public funds are to be used only for public, community, and religious schools, and for university and research activities. Private higher-education institutions may thereby obtain federal funds from national development agencies for graduate and research activities.

The federal universities and other institutions carry out research, extension, and undergraduate teaching plus providing graduate and specialization courses. Most faculty members have master’s degrees or PhDs. The costs per student are quite high, around US $10,000. State research foundations, although established according to private law, were typically set up by federal higher-education institutions.

While the state universities vary greatly, most of their courses are taught in the evening. Few teachers have high qualifications and most teach part-time. The state institutions of higher education receive various forms of government financing, which is typically not sufficient.

Private Sector Has Fastest Growth
Private institutions are the fastest growing post-secondary sector in Brazil, with enrolments that have increased by nearly two million students since 1990 – that is one-half of total current enrolment. The main sources of funds for private institutions are tuition and fees paid by undergraduate students. Tuition fees at many private institutions are falling as competitive pressures have led to price cutting. In this environment, little is invested in graduate studies and research. Most private institutions are organized as colleges or university centres, which basically provide good undergraduate courses.

In the area of research, several national development agencies provide funding for various types of research and scholarships for students in master’s and doctoral courses. Research programs and proposals are typically subject to peer review processes. There is a widely-used federal program to evaluate undergraduate courses, but this has not yet been incorporated at the graduate level.

The challenges of curbing inequality in Brazil are addressed primarily through mechanisms used to fund students’ studies. In the public sector, education is free at all federal, state, and municipal institutions. As a result, federal institutions attract a much greater proportion of applicants because of their higher quality, and they are free. Consequently, the better-educated
(and higher-income) students typically enrol in the public sector, while the rest gravitate to the private institutions. This exacerbates the inequities inherent in Brazilian society.

Despite efforts such as new scholarship programs for poor students, equity remains a high priority. At the graduate level, for example, 70 per cent of master’s and doctoral students are from families in the highest 10 per cent income bracket.

To ensure quality in post-secondary education, the National Education Council deals with issues relating to federal and private institutions of higher education, establishing rules and providing supervision, especially in the accreditation of universities and university centres. All 26 Brazilian states and the Federal District have a State Education Council with the principal responsibility of maintaining and improving quality at state institutions. The state education councils, in addition to their regulatory activities, provide accreditation of courses.

The state councils must follow the Federal Constitution in their areas of operation and these councils are not obliged to participate in the national evaluation system. Cooperation between the federal and state systems, however, often is resisted by the state councils.

There are still many challenges facing higher education in Brazil. The benefits to students attending the elite and well-financed federal universities far exceed those to the 90 per cent of students enrolled in other institutions. Quality is also a major concern, particularly outside of the federal university system. Whether these challenges can be redressed by the federal system of government remains a key unanswered question.

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Jacques Schwartzman is the head of a Higher Education Centre at the Federal University of Minas Gerais and a former member of the National Education Council.