RIO DE JANEIRO—Her face and bare arms painted with the words "medicina" and "UFRJ"—her major and the acronym, in Portuguese, of the Federal University of Rio de Janeiro—Ana Carolina and some classmates stand on a busy street in Rio’s sunny Ipanema district as they ask for spare change.

The money isn’t for tuition; UFRJ doesn’t charge any. It’s for beer. Spurred on by upperclassmen, the 18-year-old and her body-painted friends are undergoing a kind of hazing ritual to celebrate their acceptance to the school by paying for a party.

Ana Carolina, who declined to give her last name, is one of the lucky ones among young adults in Brazil.

Federal universities, which are the only free colleges in the country, are at the top of this country’s higher-education hierarchy. They are also extraordinarily competitive in a country where there is significant and growing demand for higher education—and where the people who score at the top of the SAT-style university entrance exam are predominantly rich, white students whose parents were able to afford to send them to private high schools. So the people who can most afford to pay for their higher educations end up not only getting into the best schools, but also spending nothing on tuition. "It’s not really fair," Ana Carolina said about the privilege she enjoys.

This divide in Brazil—an extreme but familiar echo of the widening social disparity in U.S. higher education—was one of the issues that sparked street protests in 2013, before the country hosted the World Cup. It’s also the target of reforms announced by the government at the time of that unrest in an effort to forestall further disruptions ahead of next year’s Olympics, which will also be in Rio.

As in the United States, Brazil’s higher-education inequity is rooted in its primary and secondary schools, which vary widely in quality but are generally considered to poorly serve the country’s 200 million residents.

Still, in some ways, American higher-education policymakers might envy Brazil. As U.S. enrollment has begun to decline—in spite of government efforts to drive more young people toward college degrees—Brazilian universities have been overwhelmed by applicants, and their student enrollment has more than doubled in just the last 10 years. The country's higher-education institutions now serve about 7 million people.

The surge in enrollment in Brazil is due in large part to the widespread recognition that university graduates here earn, on average, two and a half times more than people who don’t finish college—a bigger difference than that in any of the 34 member countries of the Organization of Economic Cooperation and Development, or OECD. And even though Americans with university educations also enjoy an earnings premium, high college costs and student debt are raising questions in the U.S. about the return on that investment.

"The rate of growth of higher education in Brazil is staggering, even for us," said Edson de Oliveira Nunes, the dean of policy and development at the Universidade Candido Mendes. "There have never been enough places. You have maybe 250,000 openings per year in a very big country." Nunes, who has also held government posts, explained this situation as he sat in his office overlooking Guanabara Bay in Rio’s upscale Flamengo neighborhood.

Another major cause of the explosion in demand for college in Brazil follows the vast growth in enrollment in what's known here as basic education—i.e., primary and secondary schools. Not until the end of military rule in the 1980s did Brazil guarantee its citizens the right to free basic education; until then, a third of Brazilians reportedly did not go to school at all, and a quarter were illiterate. In the years since, the number of students in Brazil receiving such schooling has tripled, to 57 million children today.

But the public universities have struggled to keep pace, even as the government expanded existing public campuses and added new ones. So politicians turned to private, for-profit higher-education providers, including the American companies DeVry and Laureate Education, to fill the gap.

According to Nunes, Brazil in the mid-1990s practically invented the concept of for-profit colleges—before the huge growth of such institutions in the U.S., including companies like Kaplan and the University of Phoenix. And as U.S. for-profit colleges have seen dramatic fall-offs in enrollment in the last few years, in largely part because of legal troubles and widespread skepticism about their quality, those in Brazil have continued to grow. According to figures widely cited by Brazilian news media, for-profits now enroll three-quarters of all college students here, or nearly 5.3 million people—more than twice as many students as in U.S. for-profit schools. Brazil’s five biggest universities, by enrollment, are for-profit. One Brazilian firm, Kroton Educacional, is potentially the world’s largest for-profit higher-education company, with more than 1 million students on as many as 130 campuses across the country, according to its website.

The quality of public basic schools has also failed to keep pace with their breakneck student growth, even despite significant government spending on education. Just over 6 percent of Brazil’s GDP, and 19 percent of its national budget, goes into education—more than almost every country in the OECD. Yet the World Economic Forum ranks the country 105th out of 122 countries in the quality of its education system. Many, if not most, public schools in the South American country operate only four hours a day.  

These shortcomings, according to experts, are what drive many wealthy Brazilians (most of whom are white) to enroll their children in significantly higher-quality private high schools that better prepare them for the university entrance examinations. "Much like what happens in the U.S., parents are preparing their children as early as elementary school to get into elite universities," said Gregory Elacqua, who studies Brazilian education and oversees the Public Policy Institute at Chile’s Universidad Diego Portales. "They invest a lot of money in private schools and tutors, they send their children abroad, they pay for test preparation, so they have every advantage."

And these tactics seem to work. Those who attend Brazilian public universities are both wealthier and whiter than the national average—68 percent of their students identify as white in a country where 48 percent are categorized as such, according to a study by the National Institute of Educational Studies, or INEP, a Brazilian government agency. "We have historically had an extremely elitist system where very few people could get in," said Dilvo Ilvo Ristoff, INEP’s director of higher-education statistics. "The more competitive [the program], the whiter the students are, and the wealthier they are."

And the rich don't only gain acceptance to the free public universities at higher rates; once there, they are more likely to major in disciplines that lead to high-paying careers, including medicine and engineering. While only 13 percent of Brazilians as a whole attend private high schools, according to the INEP report, 89 percent of those in medical school are private high-school grads, and 75 percent are white. Many lower-income students, meanwhile, end up paying tuition to attend for-profit universities, which specialize in majors that cost less to provide—such as accounting, management and teaching—and tend to come with lower salaries. This discrepancy, the INEP report said, "sharpens existing distortions in society" instead of blunting them.

The less well-off "don’t necessarily want to be in these programs, but it’s their only way into the universities," Elacqua said. "Then [many of them] go on to become teachers, and not very effective teachers, and it perpetuates the cycle. These kinds of policies are exacerbating inequality."

That’s similar to what’s happening, if with less attention, in the U.S., according to Martin Carnoy, a Stanford professor of education and the co-author of a new book, University Expansion in a Changing Global Economy, which looks at universities in Brazil, as well as those in its fellow emerging economies China, India, and Russia. The fastest-growing group of college-aged Americans are first-generation, low-income racial minorities often stuck in poorly performing urban high schools, according to Carnoy. If they go to college at all, they’re channeled into community colleges or second-tier colleges and universities that, as in Brazil, can limit their choices. And with the competing demands of school and work and family, reaching graduation can be a challenge. "There are smart, low-income kids who beat the odds, but very few of those poor kids manage to finish," Carnoy said.

More than half of Brazilian students are said to end up dropping out of college without earning degrees—both those at the public universities because they don’t have to pay, so there’s nothing to lose, and those at the private ones because of poor preparation and money woes. That rate is slightly more than the proportion of students in the U.S. who the Department of Education says still haven’t graduated six years after first enrolling.

Some of the for-profit universities in Brazil, like their U.S. counterparts, are plagued by questions about quality. Last year, nearly 2 percent of the for-profits in Brazil reportedly lost their accreditations for falling short of standards. But critics say the Brazilian government is so desperate to increase capacity that it overlooks most of these companies’ shortcomings. For example, although one-third of the faculty members at for-profit universities in Brazil ostensibly teach full-time as is required by law, the rest are paid by the hour. And many of these colleges fail to comply even with the one-third rule, according to Nunes. "Nobody actually has 33 percent full-time professors," he  said. "I understand the reasons why the government doesn’t clamp down on the licensing process. We kind of pretend that we have regulatory control, but we don’t."

All of these trends have apparently led to a turning point in Brazilian higher education. Fed up with these inequities, Brazilians in opinion polls put education near the top of the long list of problems they blame squarely on the government. (Much of the pessimism in Brazil is directed at the government. As one business owner quipped: When God created Brazil, he gave it gold, oil, beautiful beaches, tropical weather and no natural disasters. "But, God, it’s too perfect," said St. Peter. "Wait till you see who I put in charge of it," God said.)

The government has begun programs to address these problems, including PROUNI ("University for All"), which provides scholarships for low-income students, and FIES, which offers low-interest college loans. (Whether the resulting debt will, as in the U.S., inadvertently make matters worse for students stands to be seen next year, when the first of the loan repayments are due.) In addition, governments have offered tax breaks to for-profit universities in return for giving discounts or scholarships to low-income applicants.

"That makes more people’s lives a little bit easier," said Taina Dalcero, a student working toward a master’s degree in linguistics at one of Brazil’s private nonprofit Catholic universities, Pontifícia Universidade Católica do Rio de Janeiro, a high-quality institution that goes by PUC-Rio.

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In the high-priced Gávea district, PUC-Rio looks like an exclusive American campus—if that campus were overhung with tropical trees and divided by a river leading from the Tijuca rainforest. The facilities are first-rate, and in the plaza in front of the library bears a bust of John F. Kennedy. Students here are primarily affluent, but Dalcero sees that changing: Thanks to the government grants and loans, she said, "I have a lot of friends who don’t pay." She estimated that nearly half of them receive financial aid.

The Brazilian government has called for an increase in the proportion of 18-to 24-year-olds enrolled in college, from the current 30 percent to more than 50 percent, by 2024. (It’s currently 42 percent in the U.S., according to the DOE.) Meanwhile, the country has directed its federal universities to set aside half of their seats for students coming from public high schools—a complicated form of affirmative action that also takes into account the students’ race. The deadline for that target, too, is next year, ahead of the Olympics.

But at least one student, Diego Fonseca Ferreira, has already benefited from it. The first in his family to go to college, Ferreira said he got a scholarship to a private high school; the school helped him get into the University of Sao Paolo, where he’s working toward a bachelor’s degree in physics. ("It’s a dream I always had since I was a kid and started watching sci-fi movies," he noted.) Ferreira also recently studied abroad at the University of Illinois, at the Brazilian government’s expense as part of a relatively new federal program. On the campus in Sao Paolo, he said, he increasingly sees others who look like they come from similar backgrounds. Still, Ferreira still notices lots of inequality. "It’s just starting to change now, in this decade," he said, "but in the University of Sao Paolo you see that 95 percent come from rich families. We have a long way to go."

There have been some improvements in diversity at top-tier Brazilian universities, according to the INEP report. But the study also found that although blacks are now in the majority in the country, they are still in the minority in every degree program. "The socioeconomic gap is not changing very much," said Simon Schwartzman, a senior researcher at the Instituto de Estudos do Trabalho e Sociedade, or Institute for Labor and Society.

Impatience with the pace of these reforms exploded in 2013 into the pre-World Cup street protests. The activism is in part driven by a broader social awareness born of greater education, according to Elacqua, of the Universidad Diego Portales. "It’s like what happened in the U.S. in the 1960s," he said. "This is kind of like our civil-rights movement."

The government responded to the protests by promising to pour three-quarters of future offshore oil revenues into all levels of education, raising its investment in these programs to 10 percent of the country’s GDP. But the price of oil has plummeted since then, the fast-growing economy has stalled and the World Cup, and the Olympics have drained billions from the treasury. Meanwhile, the government has quietly stopped allowing students who are receiving PROUNI grants from also getting FIES loans, a move decried by private universities that say it will reduce the number of Brazilians able to afford tuition.

The patent need for more investment in higher education is evident on campuses such as the surprisingly run-down UFRJ, Brazil’s biggest public university. The institution was built by a military government on landfill in a remote part of the city to prevent students from being concentrated downtown; now, municipal buses regularly disgorge a steady stream of passengers on campus who line up at the two working elevators (out of five) in the administrative building, which also houses the faculties of architecture and fine arts. The brick and tile is cracked, the lights don’t work, and the roof leaks. Even in the administrative offices, the furniture is tattered. Faculty at the heavily unionized public universities are often nowhere to be found, according to students. The start of the semester at UFRJ was reportedly delayed because of a conflict involving the cleaning staff.

"I’d like to have more investment in education," said Luiz Silveira, who is studying environmental engineering in one of the few buildings on the campus that seems up to date, largely thanks to contributions from the private sector. Silveira was among the students who took part in the World Cup protests. "For me personally it was all about education," he said. As for the government’s promises, he added, "people don’t trust in those."

The rapid growth in university enrollment slowed to rate of just 3.8 percent in 2013, the most recent year for which such data is available; that was about a third of the growth rates for the years before that, according to the Ministry of Education. And while the number of students entering the universities continues to increase, the number of graduates coming out of them declined in 2013 by nearly 6 percent from the year before. "I’m not hopeful for the future of this business," said Nunes, of the Universidade Candido Mendes. "Our performance is okay for a small country, but we’re not a small country."

To reverse this trend, among other objectives, Brazil has launched a project it calls Science Without Borders—the one that sent Ferreira to the University of Illinois. The initiative aims to send 100,000 high-achieving students to top universities abroad in the hope they will return and help improve the way Brazilian universities are run. "They come back with a whole new approach with their courses," said Denise de Menezes Neddermeyer, the director of international affairs for the Ministry of Education. And while "it’s too soon" to measure the impact, she said, "if Brazil is wise enough to capture all this good energy the students are bringing, there will be good results."


This story was produced in collaboration with The Hechinger Report.