From The World Bank

Incentives needed to bring education results in line with student and countries’ needs

MEXICO CITY, May 17, 2017 – The number of students in higher education programs has nearly doubled in the past decade across Latin America and the Caribbean (LAC). But with only half of them graduating on time, there’s still a lot to do in terms of efficiency and quality, according to a new World Bank report: At a Crossroads: Higher Education in Latin America and the Caribbean, released today.

“Higher Education is key to boosting growth and reducing poverty and inequality,” said World Bank Vice President for Latin America and the Caribbean Jorge Familiar. “To ensure equity of opportunities, the region has to enhance quality of education and provide students with better information on programs, adequate incentives and financing options, and connections to the labor market. Better regulation of higher education institutions is also needed to improve accountability for the services they provide.”

A good education plays an important role in improving income prospects. In particular, the report finds that on average in LAC a student with a higher education degree will earn more than twice as much as a student with a high school diploma.

In the region, the percentage of individuals ages 18 to 24 enrolled in higher education rose from 21 percent in 2000 to 40 percent in 2010. While unequal access still abounds, there has been substantial progress, particularly among low and middle-income groups. On average, the poorest 50 percent of the population only represented 16 percent of higher education students in 2000 but that rose to about 25 percent in 2013.

At the same time, about a quarter of the higher education institutions (HEIs) that exist today were opened over that period –many of them by the private sector– lifting the market share of private HEIs from 43 to 50 percent between the early 2000s and 2013. And yet, of the top-500 HEIs in the world, the region has only about ten, a number only higher than Africa’s.

“There has been a big expansion in higher education institutions and enrollment, particularly for low income students,” said the report’s lead author World Bank Senior Economist Maria Marta Ferreyra. “However, the results fall short of their potential, with only half of the students entering higher education receiving their degree by the time they are 25 to 29 years old either because they are still studying or because they have dropped out.”

Some of the causes for a high dropout rate include academic unpreparedness, due in part to low quality education received in high school, and lack of financial means of low-income students. They may also include the long duration of some of the programs and lack of flexibility to switch between them –issues that are especially relevant now as more people tend to switch jobs and careers over a life time than ever before.

Policies that can help address some of these problems include:

Generating and disseminating information on institutions’ and programs’ performance so that students can make informed choices.
Designing better funding systems in order to provide incentives for institutions and students to achieve good results, and remove financial barriers to higher education access through instruments such as scholarships, grants for living expenses, and student loans.
Helping students connect to the labor market.
Improving oversight and regulations to ensure the institutions’ accountability for their services.
Still, the report concludes that forming skilled human capital is not enough on its own to raise productivity, growth and equity. There also needs to be an environment in which firms can create good jobs that, in turn, can make productive use of a more skilled labor force.

Learn more about the work of the World Bank in Latin America and the Caribbean: www.worldbank.org/lac