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Federations Magazine Article
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Tax Measures Help Needy Students

Tax Measures Help Needy Students BY Jacques Schwartzman

The wide gap between rich and poor in resourcerich
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.