The De-commodification Cleavage: Parties, Non-Partisan Actors, and Path Dependence in Brazilian Tertiary Education Reform, 1990s–2020s
comparative political economy of education, redistribution, tertiary education, affirmative action, business power, process tracing, Brazil
The final result of political action often, no, even regularly, stands in completely inadequate and often even paradoxical relation to its original meaning.
Abstract:
In Brazil, tertiary enrollment expanded under governments of every partisan orientation, but its distributive incidence did not: under the center-right, gains accrued overwhelmingly to the rich; access inequality fell sharply in the late 2000s and mid-2010s, mostly under left-wing governments. Using inference to the best explanation (IBE) process tracing and household-survey income-composition data, we adjudicate among competing explanations about the political cleavages of tertiary education reform to explain how access was redistributed between 1994 and 2024. We show what dominant theories capture and what they misdescribe. We find that, contradicting theories that enfacized expansion as a policy cleavage in tertiarty education policy, we argue that the relevant axis of partisan competition are funding-related policies that affect the cost of the system rather than enrollment expansion. While for-profit educational actors diluted student-subsidy targeting, social movements secured affirmative action that no partisan coalition would have produced alone, and path dependence plus fiscal constraint best explain persistent private-sector dominance.
Introduction
“If you give the power to decide on the opening of private colleges to the Discalced Carmelite nuns, at the second meeting they’ll show up with Louis Vuitton bags.” So remarked Paulo Renato de Souza, Minister of Education throughout both Fernando Henrique Cardoso (FHC) center-right administrations (1995–2002) and a leading voice on education within the Partido da Social Democracia Brasileira (PSDB). During his tenure, Brazil’s private tertiary enrollment nearly tripled after fifteen years of stagnation. Current accounts in the literature treat that growth as evidence of an ideological preference for private provision or as confirmation of partisan theories: a right-wing government expanding access through its preferred private sector to benefit its upper-middle-class electorate. However, Souza’s distrust of private providers, represented by that opening phase, complicates these explanations. The government that supposedly championed private tertiary education was simultaneously hostile to the for-profit sector in several respects: even as it reformed regulation in ways more favorable to private enrollment growth, that administration litigated against private institutions to impose tuition-fee controls, cut fiscal exemptions, subjected institutions to quality evaluations, and attempted to close defying institutions. Ansell’s (2008) theory predicted that right-wing governments should champion expansion and subsidization when enrollment is low (the elitist phase), and opose further growth when the system become massified. The are also theories that expect a cleavage in partisan preferences around public and private provision of education, with the right suporting the private sector while the left foster public provision (Carvalho, 2011; Cunha, 2003).
The Partido dos Trabalhadores (PT) center-left administrations progressively advanced policies aiming at reducing income-based inequality in tertiary education access through targeted subsidies and affirmative action that benefited students from mostly lower-income households, redestributing state resources to ease access to education of targeted groups. Their administrations also expanded public provision, but many reforms also complicate a simple partisan account of public vs. private preferences. ProUni exchanged tax exemptions for scholarships in private institutions while the expansion of subsidized student credit through FIES eventually extended eligibility to higher-income families and greatly subsidized enrollment in private institutions. Both programs channeled relevent amounts of public funds to private, including for-profit institutions. Meanwhile, Souza, the former minister that by then were the leading voice in parliamentary opposition to PT administrations, brokered an agreement that cleared a central congressional veto point on affirmative action, conditioning his party’s assent on an income and public school origin criterion within the affirmative action design that already included racial quotas. The affirmative action policy survived subsequent, including far-right administrations opposed to racial quotas. Across these political changes, enrollment continued to expand, from left to right administrations, while the financing instruments, eligibility rules, and coalitions shaping access varied considerably. The Brazillian case reveals a puzzle that the current literature struggle to answer. To tacclke that puzzle this research investigates what are the political cleavages shaped Brazilian tertiary education reform?
Drawing on income-composition data from national surveys, legislative records, and journalistic sources to trace the political processes from the 1990s to the present, this paper examines reforms from the mid-1990s to the present we evaluate competing theories through an inference to the best explanation (IBE) process tracing (Fairfield & Charman, 2022). Our findins offer three contributions to te literature around that problem. Contraria a expectativa de que haveria uma clivagem partidária relativa a expansão das matrículas, ou seja relativa tamanho do sistema e ao sistema público, we argue that a main partisan cleavage in the tertiary education policies is related to the financing, or the degree of subsidy, of the educational expansion.
While Ansell (2008) links partisan preferences for expansion and subsidization to enrollment thresholds and the income profile of expected beneficiaries, and Gomes (2024) reports that Brazillian thajectory is coherent to that theory, an alternative body of recearch finds evidence that the financing of access and the instruments that reduce its dependence on household income, while allowing enrollment to expand across all governing orientations (Garritzmann, 2016; Garritzmann & Seng, 2026). Similarly, teorias partidárias não são capazes de explicar a opção pelo ssitema de provisão educacional, since expansion of private sector was a contanst during the period. While part of the literature attributes the persistent dominance of the private sector to the ideological preferences of center-right governments (Carvalho, 2011; Cunha, 2003); an alternative accont maintains that institutional inheritance and binding fiscal constraints make structural reversal prohibitively costly regardless of governing-party preferences, a claim most directly testable under the left-wing administrations that declared preferences for public expansion but presided over continued private-sector dominance (Arretche, 2019; Pierson, 2004).
Explaining this combination requires distinguishing a preference for expansion while keeping the overall costs of the system low from a preference for the private sector as such: the center political dispute concerned how expansion would be financed and regulated, and cannot be reduced to a prefecence for the private sector. The findings of our reaearch defies a relevant theoretical discussion in the field that expect that right wing parties would opose expansion of teriary educacion once it reaches a certain enrollment level. Os achados desse texto vão no sentido de mostrar que as clivagens partidárias não se organizam ao redor da expansão do sistema mas na forma do financiamento desse setor educacional.
Adjudicating among these competing explanations, the paper finds that explanations based on strong party-centered theries that emphasize governing parties preferences as the main determinants of the policy thasectory should need to be relaxed both in favor of integrating factor exogenous to perty preferences, such as path dependence (Garritzmann, 2016) and to better account for the relevance of plural-actor political agents that can not be reduced to parties. The literature and evidence collected in this research indicates that private providers, their representative associations, and social movements affect policy design, timing, and targeting (Busemeyer & Thelen, 2020; Fairfield & Garay, 2017; Pereira, 2021; Tarlau, 2019).
Discriminating among these theoretial expectations requires evidence on who set the policy agenda, how actors contested instruments with redistributive implications, what resistance they encountered, and how reforms unfolded. Following Fairfield & Charman (2022), the analysis formulates three pairs of competing hypotheses and evaluates the evidence by asking how likely each observation would be under each explanation. The accompanying database records the sources and hypothesis-relative assessments of qualitative and quantitative evidence, making the inferential reasoning available for scrutiny and further research
The paper develops these arguments in four steps. The political cleavages of tertiary education policy: parties, enrollment and redistributive effects situates the argument in the relevant literature, explaining why de-commodification rather than enrollment expansion constitutes the relevant partisan cleavage and introducing easy/hard redistribution and the role of non-partisan actors as the analytical tools of the alternative account, while showing why macro-level evidence cannot adjudicate among rival causal stories. ?sec-research-design then justifies the IBE process-tracing design (Fairfield & Charman, 2022), operationalizes these theoretical tensions into three pairs of mutually exclusive hypotheses, and specifies the evidentiary base and inferential logic. ?sec-empirical-core traces the political processes behind the major reforms from the mid-1990s to the present, integrating direct income-composition evidence with the process-tracing narrative to show how fiscal constraints and path dependence, non-partisan actors operating in opposing directions, and post-enactment reshaping of redistributive targeting produced outcomes whose causal architecture the rival hypotheses specify differently. ?sec-discussion draws out the implications for the relevant theories and for the study of welfare-state and education policy in Latin America.
The political cleavages of tertiary education policy: parties, enrollment and redistributive effects
The political-economy literature on education, diferete de diversos framework teoricos sobre educação sueprio e desigualdad educacionais attributes such distributive trajectories to political struggle, power relations, and state action (Carnoy, 1985), framing tertiary-education policy as a political problem with relevant redistributive consequences (Ansell, 2010; Busemeyer, 2014; Busemeyer & Nikolai, 2021; Busemeyer & Trampusch, 2011; Garritzmann, 2016; Garritzmann & Seng, 2026; Gomes, 2024). Ou seja, essa tradição teórica espera que existam clivagens politica importantes na politica de educação terciária e que ela impacte quem se beneficia da educação e como. De fato, como vemos na Figure B.1 os padrões de quais decis de renda aumentam sua matrícula durante os governos é bastante distinto entre os governos de centro direita de 1992-2002 e os governos de centro esquerda entre 2003 e 2016, como seria esperado por tal perspectiva teórica.
But what are the actual expactations on how partisan politics explain the distributive politics of educational access? Challenging traditional theories that assume left-wing parties universally advocate higher public spending on higher education (Boix, 1998; Huber & Stephens, 2001), Ansell (2008) proposes that partisan preferences regarding higher education are conditional on existing enrollment levels. Ansell formulates this dynamic as a higher-education policy trilemma: governments cannot simultaneously maximize mass enrollment, full subsidization, and low fiscal cost, so systems tend to stabilize in one of three configurations (elite, partially private, or mass public) (Ansell, 2008, 2010). The causal core is that, when access is low and strongly income-dependent, expansion distributes benefits regressively: lower-income taxpayers finance institutions from which high-income and upper-middle-income groups disproportionately benefit. Because access to tertiary education is heavily associated with the socioeconomic level of the students, financing an elite (under around 33-40% of gross enrollment) system through general taxation is fiscally regressive. In Brazil, the gross enrollment rate reached 33% only in 2015 and 40% in 2024, while private enrollment grew almost ninefold from 1992 and public enrollment roughly threefold Figure 3.2, Figure 3.3. Consequently, when enrollment is low, right-wing governments are expected by Ansell (2008) to champion expansion and high subsidization because the marginal beneficiaries belong to their wealthier electorate. Left-wing parties, by contrast, are reluctant to tax the poor to subsidize the rich and therefore either resist expansion or prefer partially private models, unless they can advance policies to reduzir a dependência da renda no acesso a educação, o que pode antecipar o apoio da esquerda aos subsídios. Ansell assume que os partidos agregam preferências de suas bases; explicitamente, não escolhem essas políticas para conquistar votos, while Gomes (2024) argumenta, em desacordo com ansell. a expansão como estratégia para incluir potenciais eleitores futuros.
Once massification shifts the income profile of the student body, however, partisan preferences reverse: the left becomes the primary defender of mass public expansion and full subsidization, while the right attempts to halt further growth to limit tax burdens and protect the scarcity rents of an exclusive diploma. By contrast, Garritzmann (2016) identifies a blind spot in this framework, arguing that enrollment levels are largely endogenous to policy choices — specifically, to the provision of student aid. He therefore distinguishes institutional expenditure from student subsidies and argues that left-wing parties seek to expand the latter in order to foster equality of opportunity and reduce income bias in access that can be categorized as de-commodification policies, whereas right-wing parties oppose them and favor tuition fees to preserve higher education’s exclusivity. IN other words, wereas Ansell trilemma theory predics that there is a clevagem releted to ensrollment, that changes financing preferences,, Garrizzman argues that the policital cleavage is centered on the financing
In Brazil it would be expected, therefore que um governo de direita fosse favorável à expansão subsidiada. Quandro se vria ram universdiade no Brasil criaram justamente instituições gratuitas para a elite. No entato encontramos, contrastanto essa teoria com o caso empírico Brasileiro, que existem muitos outros fatores que importam para explicar o sistema e a preferencia dos governos. Overall as teorias tem expectativas a partir de premissas que não se encaixam bem no Brasil. Elas não tem muito o que dizer sobre sistemas que já são dualizados entre sistemas públicos e privados. Os governos de direita da década de 1990, que assumem após um regime autoritário (Soares et al., 2002; Swarczman2026?), que havia tanto consolidado unversidsidades públicas federais quando uma série de instituições privadas e com uma agenda paitada no constrangimento fiscal enquanto tinham de expandir os sistemas educacionais demostraram ter preferencias e tocar polítiticas distintas do que essa teoria espera que eles fariam.
Enquanto a preferencia indicava que eles eriam seguir expandindo com subsídio público, a linha central do governo foi distinta: o foco do governo foi mudar a regulação da educação privada de forma a estimular a abertura das universidades. O crescimento de instituições privadas sob FHC não confirma a previsão de Ansell, na medida que ela era, centralmente financiada pelas famílias (mais ricas) que continuaram ingressando na educaçõa superior privada pagando mensalidades. O governo agiu no sentido de cobrar mais importos das empresas que não se enquadravam dnas regras sem fins lucrativos e de combater as instituições que queriam aumentar mensalidades mas não tinham disposição de financiar, como era esperado essa expansão.
When Fernando Henrique Cardoso assumed the presidency in 1995, his administration inherited a tertiary education system at the onset of what the Brazilian literature designates the “second expansion cycle” — a resumption of enrollment growth that had begun in the mid-1990s, following more than a decade of stagnation during the 1980s and early 1990s (Senkevics, 2021). The first expansion cycle, the name given to the explosion of tertiary-sector enrollments in the late 1960s and the 1970s driven by the military reform of 1968 (Brasil, 1968), had multiplied the sector from roughly 100,000 enrollments in the early 1960s to approximately 1.4 million by 1980, predominantly in private, non-university establishments that proliferated well beyond what reformers had originally anticipated. The model they envisioned was the United States research-university model, not the mass-teaching, non-university isolated institutions that eventually dominated (Schwartzman, 2026).
At the baseline of the second cycle, in 1993, the net enrollment rate for 18-to-24 year-olds stood at only 5.8%; the system was thus still extremely restricted, with roughly 75% of students originating from the wealthiest quintile of the population (Senkevics, 2021). The 1968 reform had also locked public institutions into a research-university model centered on teaching, research, and extension, with high operating costs and a highly credentialed faculty (Balbachevsky et al., 2019). Discussions about higher education reform never ceased altogether (Carlotto, 2014)1; proposals remained a constant feature of the policy landscape. Yet legislative reform remained largely incremental for most of the period. Regulatory activity centered on accrediting institutions and authorizing new courses and seats or blocking them, including explicit restrictions on expansion under both the military regime and the democratic transition (Brasil, 1979, 1981, 1982, 1986; Souza, 2005).
The literature is emphatic in identifying the economic crisis of the 1980s as a central explanation for enrollment stagnation in that decade (Durham, 2005; Sampaio, 2000), but it has sometimes underemphasized the simultaneous role of regulatory intervention in constraining expansion, as noted by Souza (2005, p. 147) and Almeida (2012, pp. 47–48). From the 1980s through the mid-1990s, a succession of decrees restricted the expansion of higher education, particularly in non-university institutions, imposing a protracted authorization bureaucracy for the opening of new seats that functioned, in practice, as an anti-expansion policy confining growth legally to the universities. Perhaps the most dramatic of the measures that restrained expansion was Decree 86.000 of 1981 (Brasil, 1981), which may account for the surprising drop of nearly 200,000 enrollments in Brazil between 1981 and 1982 by prohibiting the creation of new higher-education courses. The creation of new seats was strictly regulated by the education councils and the ministry through procedures recorded in an extensive sequence of decrees that progressively accumulated into the regulatory framework governing expansion; the non-exhaustive list of successive decrees on the recognition, creation, and regulation of higher-education courses below illustrates a trajectory of regulation through council accreditation that extended over more than fifteen years (Brasil, 1979, 1981, 1982, 1986, 1987a, 1987b, 1988, 1989, 1991b, 1991c, 1994c, 1996, 1997a).
In the public sector, fiscal contraction also curtailed institutional growth, while in the private sector declining household income reduced demand for tertiary education, limiting both the pipeline of secondary-school graduates prepared to continue and the number of families able to pay 2. As Kang (2023) shows, the crisis severely depressed financing for secondary education, which fell below world-regional averages before recovering, as documented by Lee & Lee (2016). At the same time, the successive decrees previously cited explicitly restricted seat creation and repeatedly reassigned authorization authority3, at different moments centralizing decisions either in the Ministry of Education or in the presidency after consultation with the Federal Council of Education.
Accordingly, during the Itamar Franco administration, which preceded FHC, the Federal Council of Education was widely accused of capture by private interests, influence peddling, corruption, and favoritism, especially in decisions over course authorization, where thousands of applications accumulated and were rarely processed in a timely manner. Allegations included both selective facilitation of approvals and partiality linked to conflicts of interest, as universities that nominated council members were said to block potential competitors in their own regions. The crisis reached the point that the Federal Council of Education was extinguished, its functions were temporarily delegated to state education councils, and it was later reconstituted as the National Education Council (Brasil, 1994b; Folha de S.Paulo, 1994; Secco, 1995; Souza, 2005).
The FHC administration is often portrayed in Brazilian scholarship as systematically pro-private and neoliberal, with explicit preferences for private-sector service provision (Carvalho, 2015; Cunha, 2003; Sguissardi, 2008). This expectation also resembles that of more traditional partisan theory (Boix, 1998; Huber & Stephens, 2012), which, as Ansell (2008) and Gomes (2024) note in an important review of the literature, generates the expectation that the right will prefer market-based solutions for educational provision. In this interpretation, an ideological preference for private provision would have led the government to intentionally favor private-sector expansion. The political-economy theories discussed here, however, generate a different set of expectations. In Ansell’s framework (2008, 2010), a right-wing government in an elite system (defined here as one with enrollment rates below 33%) should expand tertiary education because the marginal beneficiaries are expected to belong to its electorate. Expansion should also occur through subsidization patterns with distributive effects favorable to higher-income groups, who are presumed to constitute that electorate. Yet these accounts are either based on premises that are inconsistent with the empirical record or contradicted by the observed policy outcomes of the period.
Second, the expectation that right-wing governments would expand an elite sector through higher public spending per student does not fit the observed policy dynamics: expansion occurred more strongly through the private sector and the public sector was under persistent expenditure constraints during most of the administration. For these reasons, Ansell’s account appears insufficient to explain the redistributive dynamics of PSDB-era tertiary policy. On one hand, the PSDB marked a break with late-authoritarian and early-transition governments (such as Sarney and Collor), which had largely constrained tertiary expansion through decrees and provisional measures that restricted new-course authorization in non-university institutions. On the other hand, as the subsequent sections show, the central cleavage with the PT concerned de-commodifying policies, which were substantially expanded under PT governments that, despite criticizing several FHC-era measures while in opposition, broadly maintained the expansion trajectory. During the FHC era, access to tertiary education stayed highly income-dependent as competition for seats was intense after more than a decade of stagnation in enrollments and provision remained heavily commodified in the private sector. This stands in clear contrast to the de-commodifying measures adopted under PT administrations. The period also shows that non-partisan private actors were politically consequential, and that party-centered theories alone cannot fully account for the observed outcomes.
Whether the FHC government was regressive in tertiary education admits a qualified answer. The system expanded predominantly (though not only) through the private sector, where tuition fees were prohibitively expensive for most Brazilian families, so the distributional effect was predictable. Yet the government actively fought to cap tuition fees and pursued several redistributive policies in the provision of public services (Arretche, 2019). In terms of education more broadly, Alves (2024) shows that the massive expansion of basic education financing through FUNDEB was a major redistributive measure, one that the author concludes was driven by electoral competition rather than strict partisan preference, consistent with the framework of Fairfield & Garay (2017).
Forging the quality control, tuition fees and expansion regulation
The transformation of tertiary education regulation in the mid-1990s and early 2000s was profoundly contentious, pitting the federal government directly against various partisan and non-partisan actors. After more than a decade of enrollment stagnation, the Cardoso administration inherited a large backlog of pending applications for new courses and university conversions left unprocessed under the restrictive regulatory policies of its predecessors, which had systematically constrained institutional growth, especially in private non-university tertiary education institutions.
Upon taking office, the Minister of Education, Paulo Renato de Souza, recounts in his account of the period (Souza, 2005) that he was immediately approached by deputies, senators, and private actors requesting support for course approvals and the conversion of institutions into universities, a status that conferred autonomous authority to open new courses and expand enrollment in the institution’s home municipality without case-by-case ministerial authorization (and therefore a decisive regulatory advantage in a context where standard authorization processes could take years) (Souza, 2005, pp. 147, 171–173). The main legal barrier to expanding tertiary enrollment had been the required authorization from the Federal Council of Education, a system widely denounced as highly susceptible to lobbying and political pressure from the private sector (Bergamaschi, 1994; Carlos Silva, 1994; Folha de S.Paulo, 1994; Pinto & Dimenstein, 1997), both as pressure to expand course offerings and, conversely, as pressure from established actors to block the entry of potential competitors (Souza, 2005).
Quality control
The new administration adopted an explicitly expansionist regulatory posture, aimed at changing the procedures that had constrained institutional growth through restrictive decrees justified on quality grounds. The ministry operated under the premise that demand for tertiary education was rising and that suppressing institutional growth would only preserve an exclusionary, elitist system (Souza, 2005). Souza’s declared intention was to reverse the logic: instead of blocking creation ex ante, the new approach facilitated the conditions for opening new courses and institutions while simultaneously constructing a post-hoc quality-control apparatus designed to discipline the system from the output side (Souza, 2005). This instrument, administered at the end of undergraduate training, became known as the Provão (formally the ENC, Exame Nacional de Cursos, known today as ENADE, the National Exam of Student Performance, in the Portuguese acronym), anchoring a regulatory shift that sought to evaluate expansion ex post rather than restrict it.
The administration preceding FHC’s had abolished the Federal Council of Education (CFE) in late 1994, a measure taken in the wake of a corruption scandal that had exposed the organ as a marketplace for institutionalized dealings between college lobbyists and council members. With the expectation of better insulating policy from the conflicts of interest that had led to the CFE’s dismantlement, the CNE (National Council of Education) was initially granted less authority than its predecessor; the direct power to inspect and accredit universities was instead shifted to bureaucratic analyses within the Ministry, with the council deciding on authorizations only after reviewing the Ministry’s technical assessments (Brasil, 1994b; Folha de S.Paulo, 1995).
To contain corporate lobbying and improve educational quality, the minister anchored the administration’s strategy on the National Examination to establish quality control via centralized evaluations (Souza, 2005, pp. 148, 150–151). By basing accreditation on objective performance indicators, the Ministry aimed to limit the margin for political favors; the National Council of Education would decide on authorizations based on the technocratic indicators produced within the Ministry’s evaluation procedures (Souza, 1995). A first step was therefore to institutionalize the exam, which proved contentious even within the ministry. In one of the re-editions of the provisional measure that had abolished the Federal Council of Education and created the National Council of Education (Brasil, 1995b) — which would later be converted into Law 9.131/1995 (Brasil, 1995c) — the government introduced a provision creating the Provão. Both the private sector and the left-wing-controlled student union attempted to sabotage the exam: in 1995, an organized, cross-partisan effort in Congress saw eight legislators from six different parties introduce identical amendments to mandate secrecy for the test results, exposing a coordinated legislative interest group dedicated to protecting institutions that stood to suffer from public disclosure of the exam results (Dimenstein, 1995).
In Congress, the Provisional Measure faced fierce obstruction. The opposition, led by leftist parties and the National Student Union (UNE, in the Portuguese acronym), systematically emptied joint sessions to prevent a quorum, forcing the government to reissue the MP monthly (Souza, 2005, pp. 151, 157). To break this deadlock, the MEC executed a complex political maneuver. With the extinction of the CFE, the Ministry had inherited a massive backlog of approximately 5,000 pending applications for new institutions and courses, alongside over 100 requests for the conversion of colleges into universities — the ultimate ambition, as university status granted autonomy to expand without constant bureaucratic approval (Souza, 2005, p. 148). The Minister deliberately paralyzed the analysis of these thousands of processes within the MEC’s provisional council, publicly announcing that the government would only resume authorizations after Congress approved the Provão (Souza, 2005, p. 157). According to the minister of education, that strategy worked: desperate to unlock their processes, the owners of private institutions activated their congressional lobby, aggressively pressuring parliamentarians to pass the measure. Thanks to this private-sector pressure, combined with a procedural maneuver by the congressional vice-president that guaranteed a quorum, the contentious bill went to a vote and was sanctioned in November 1995, following a last-minute concession that the Provão score would not appear on students’ official transcripts (Souza, 2005, pp. 157–158).
Following the law’s passage, private universities avoided public confrontation over a measure aimed at educational quality, while leaving public universities and students to conduct the visible protests against the exam (Souza, 2005, p. 151). Finally implemented in 1996 (Rossetti, 1996a), the Provão continued to face a wall of opposition: rectors published open letters questioning its methodological validity (Rossetti, 1996b), while the student movement organized boycotts and lawsuits attempting to block its first application (de Brasília & do Rio, 1996; Rossetti & Silva Pinto, 1996). Nevertheless, it survived these attempts to veto it through legal channels. The minister’s expectation was that, over the long run, it would reshape the market dynamics of private education by leading students to demand higher-quality programs; the better-evaluated courses would grow while the rest stagnated, gradually shifting expansion toward higher-quality provision (Souza, 2005, pp. 165–168, 173). Over time, the government calibrated the tool, transforming the Provão from a diagnostic exam into the backbone of tertiary-education expansion policy, where scores began to determine institutional closures — which, however, were frequently overturned by the courts, while institutions often found ways to remain open — as well as funding allocation and access to student credit, mechanisms that would later penalize poorly evaluated institutions (Souza, 1999).
Expansion regulation
The ministry still had to confront the massive backlog of course requests on which the private sector lobbied heavily. Predatory practices multiplied to evade ministerial inspections, including fraudulent maneuvers such as physically transporting entire libraries between campuses on evaluation days (Freitas, 1997; Romano, 1997). The minister’s position, as the preceding subsection established, was that course accreditation should be facilitated rather than controlled case by case by the ministry: instead of confronting the bureaucracy at the moment of creation, courses were to be authorized first and evaluated afterwards, with that evaluation becoming the condition for issuing degrees.
Tuition fee regulation
Tuition-fee regulation also became one of the most politically contentious fronts in the Cardoso administration’s relationship with the private sector — a domain of state intervention that was not an administrative novelty but rather the continuation of a long-standing trajectory of price controls. Private school tuition had been subject to state oversight since the 1960s (Brasil, 1969); and the hyperinflationary stabilization plans of the 1980s period reproduced this interventionism through macroeconomic price freezes that wielded police power to audit and fine non-compliant institutions. The dispute was essentially structured around a coalition that included the parents of private-school students — who broadly favored state regulation of tuition increases — alongside both private basic-education and tertiary institutions.
The Collor administration also regulated that with Law 8.039/1990 (Brasil, 1990) and then Law 8.170/1991 (Brasil, 1991a). Lei 8.170 was itself immediately subjected to further executive modification, however: Provisional Measure 295/1991 and Law 8.178/1991 altered its Art. 2 even before the Collor government fell; and under the Itamar Franco administration a new family of provisional measures governed tuition readjustments for the second semester of 1993, before the Real Plan was launched in July 1994 (Brasil, 1993).
Executive price regulation through MPs was therefore already an established instrument when Itamar issued Provisional Measure 550 in July 1994 to govern the conversion of tuition values to the new Real currency (Brasil, 1994a); that measure was re-edited six times before the end of 1994 and once more on January 5, 1995, only four days into Cardoso’s first term, before Provisional Measure 887 of January 30, 1995 revoked it and re-established the chain under a new originating instrument (Brasil, 1995a). MP 887 was carried forward by the chain of re-editions that would govern school tuition for the next five years.
Rather than maintaining a hands-off neoliberal posture, as parts of the literature had led one to expect from a center-right administration, the Cardoso government inherited and institutionalized this long-established executive instrument, converting what had been a series of reactive price interventions by its predecessors into a sustained, politically consequential price-control regime. Over the five years that followed, it issued sixty-two consecutive editions of MP 550, each introducing incremental changes. The first fourteen editions had regulated the conversion of tuition values from cruzeiros and URV into reais — a monetary operation technically continuous with Itamar’s original MP 550 (Brasil, 1994a). The private sector, organized under the National Confederation of Educational Establishments (CONFENEN), resorted to the Supreme Federal Court (STF) to challenge the constitutionality of monthly re-editions and the price ceiling as violations of free enterprise and educational freedom under the 1988 Constitution.
The STF granted a partial injunction suspending provisions that conditioned federal funding on compliance with the ceiling, but upheld the core of the state’s regulatory authority over tuition levels, forcing a protracted legal standoff that would persist until the legislative conversion of the measure in November 1999. Running alongside and reinforcing the MP-based control was the student-as-consumer enforcement framework formalized by Decree 2.207/1997 — discussed in the preceding subsection — under which the Ministry of Education operated in partnership with the Secretary of Economic Law (SDE/MJ) and state consumer-protection agencies (PROCONs) to sanction institutions that raised prices without presenting publicly disclosed, mathematically justified cost spreadsheets (França, 1997b, 1997a).
This adversarial relationship, which contradicts the partisan expectation of a neoliberal coalition, escalated into what became known as the “war on tuition fees”. To protect the newly implemented currency against the Asian and Russian financial crises, the Central Bank aggressively raised interest rates; the resulting economic downturn squeezed middle-class incomes, and by mid-1998 private educational institutions faced a massive wave of defaults. Reports at the time indicated a 126% increase in unpaid tuitions, with over 230,000 students and parents blacklisted by credit agencies (Avancini, 1998). To offset these losses, institutions retaliated by imposing abusive tuition hikes on paying students for the following academic year and barring defaulting students from attending classes — precisely the conduct the MP-based ceiling had sought to prevent and the judiciary had been only partially capable of suppressing.
The escalation forced the administration to act decisively. In late 1999, Minister Paulo Renato Souza introduced the final legislative intervention on tuition pricing (Gaspari, 1999); the 68th and final edition of the MP 550/1994 family was converted by Congress into Law nº 9.870 of November 23, 1999 (Brasil, 1999). The law prohibited arbitrary tuition increases, mandated that any adjustment be mathematically justified by a publicly disclosed cost spreadsheet submitted forty-five days in advance, and explicitly banned “pedagogical sanctions” — institutions were legally forbidden from preventing indebted students from attending classes, taking exams, or receiving academic transcripts during the school year, with debt collection strictly relegated to judicial channels. Signed by President Cardoso alongside the Ministers of Education (Paulo Renato Souza), Finance (Pedro Malan), and Justice (José Carlos Dias), it functioned as a negotiated settlement under constraint: the state banned immediate pedagogical coercion while allowing institutions to deny enrollment renewal for the subsequent academic term. Analytically, however, Law 9.870 represents a qualitative shift away from the MP-based price-control model and toward a consumer-protection one. Under the MP regime, the state had imposed a direct ceiling on annual tuition. Law 9.870 replaced this with a disclosure-based reference value that institutions could exceed provided they published a detailed cost justification in advance, transferring the enforcement burden from the state to the consumer and the judiciary. Cardoso reinforced this liberalizing direction through partial vetoes, eliminating the provision that would have imposed additional restrictions on the permissible percentage of increase and removing more detailed disclosure requirements — delivering the private sector a partial legislative victory within the same act that introduced consumer protection against the most predatory practices. That the final instrument combined student protection with a liberalization of the pricing regime, and that it was signed by the Finance Minister as much as the Education Minister, captures the dual character of the Cardoso administration’s regulatory stance: interventionist enough to be condemned by private providers as statist, market-oriented enough to be condemned by the academic left as neoliberal, and adequately explained by neither label in isolation.
This intervention was part of a broader strategy to discipline the market by empowering students as active consumers. The Cardoso administration transformed the legal understanding of private education, subjecting it to the rigors of consumer law. Decree 2.207/1997 (Brasil, 1997a) had already operationalized this relationship by mandating that all institutions publicly disclose their teaching conditions (including faculty qualifications and physical infrastructure) prior to enrollment. This enabled students to invoke the Consumer Defense Code (CDC), mobilizing consumer protection agencies (Procon) and the courts if the actual service delivered fell short of the advertised conditions (França, 1997b, 1997a).
Rather than acting as a passive partner of the state, the private sector actively resisted this consumer-protection framework and the associated tuition controls, frequently resorting to the judiciary to block enforcement.
The judicial system thus emerged as a critical veto point that limited the government’s regulatory capacity, providing early evidence of the autonomous business power that would become increasingly consequential in subsequent administrations.
The second major regulatory front targeted the fiscal architecture of the sector.
Decree 2.207/1997 (Brasil, 1997a) formally permitted strictly private institutions to operate on a for-profit basis, a regulatory change that the critical literature has frequently treated as a hallmark of neoliberal policy design (Carvalho, 2015; Cunha, 1997, 2003).
The available evidence, however, supports a more nuanced reading. The distinction between non-profit and for-profit institutions was primarily a matter of tax status: confessional and philanthropic institutions retained significant fiscal exemptions by virtue of their non-profit legal status, while strictly private (“particular em sentido estrito”) institutions were permitted to distribute profits but were not entitled to the same exemptions. The government’s rationale was not to favor the private sector, but to clarify a regulatory fiction and to curb the widespread tax exemptions that followed from presuming that no institution operated for profit.
Many nominally non-profit institutions had long operated as profit-oriented firms in practice, utilizing loopholes—such as renting properties to themselves at inflated rates, paying massive salaries to their owners, and contracting private services from affiliated companies—to indirectly distribute profits while maintaining complete tax exemption (Sampaio, 2000). Indeed, Minister Paulo Renato Souza justified the change by calling the existing ban on profits a “farce” since “these entities use every subterfuge to bypass the law,” asserting that “if they want to make a profit, they should start paying taxes” (França, 1997a). By formalizing for-profit status, the government demanded that institutions choose: either prove genuine philanthropic operations to retain their tax exemptions, or formally operate as for-profit businesses and pay taxes. The reform thus combined fiscal transparency with a reduction in tax expenditures.
Yet Decreto 2.207 left a structural problem unresolved that its successor, Decreto 2.306 of August 1997, was designed to address.
Non-university institutions — faculdades integradas, faculdades isoladas, and technological institutes — remained subject to the case-by-case ministerial authorization that had been the object of lobbying and regulatory capture under the old CFE: every new course and increment of enrollment slots required a separate administrative process with no guarantee of timely review.
Universities, by contrast, enjoyed full administrative autonomy to expand course offerings and enrollment within their accredited geographic remit without ongoing bureaucratic dependency. This categorical asymmetry created a structural incentive for every private institution to pursue university designation above all else, since the label was, in practice, the most valuable regulatory asset the system offered.
The resulting race had been underway for a decade: Paulo Renato noted publicly that the number of private universities had grown by 130 percent in ten years, driven not by any substantive expansion of research capacity but by the premium attached to the designation (Rossetti & Simões, 1997). The CNE, created as a normative body designed to insulate accreditation decisions from the pressures that had corrupted the CFE, became the new site of that pressure: converting to university required CNE authorization, and private actors worked systematically to secure favorable decisions (Barros e Silva, 1997). The institutional perverse incentive was structurally the same as under the predecessor regime: the authorization bottleneck had migrated from one organ to another, not disappeared. The crisis that exposed this vulnerability broke on August 21, 1997, when the CNE voted six to five to authorize the conversion of the Faculdades Anhembi-Morumbi into a university. The council’s president, philosopher José Arthur Giannotti, resigned in protest, publicly denouncing the decision as technically ungrounded: Anhembi lacked the institutionalized research activity the constitution required of universities, and in his assessment the deliberation had been politically rather than academically driven (Barros e Silva, 1997).
The government responded through both personnel and institutional architecture. Paulo Renato appointed anthropologist Eunice Durham to replace Giannotti and used the episode to announce a reorientation of the ministry’s regulatory posture, declaring: “I want MEC to play a role more tied to evaluation than to credentialing” (author’s translation) (do Rio, 1997). Decreto 2.306 (Brasil, 1997b), signed four days before the Giannotti vote became a public crisis, had already operationalized that reorientation at the level of institutional design. It established the comprehensive post-LDB typology of higher education institutions — universidades, centros universitários, faculdades integradas, estabelecimentos isolados, and institutos tecnológicos — specifying their distinct obligations regarding faculty qualifications, research requirements, and administrative autonomy.
The most consequential innovation was the formalization of centros universitários as an intermediate category: institutions meeting defined quality benchmarks could obtain the autonomy to create and close courses without prior ministerial authorization without satisfying the full research requirements of a university (Rossetti, 1997; Rossetti & Simões, 1997). Paulo Renato was explicit that the fixation on the university designation had become a structural deformation: “A myth has been created around the name ‘university’ in Brazil” (author’s translation), adding that the country needed a differentiated institutional system in which quality could take multiple forms rather than being identified with a single model (Rossetti, 1997). The outgoing council president supplied the clearest retrospective diagnosis: “This crisis provoked the need for a finer instrument to distinguish what is a university and what is a centro universitário” (author’s translation) (Bernardes, 1997a).
The CNE subsequently froze all pending university credentialing processes until November, pending the establishment of the criteria governing the institutional boundary D2.306 had introduced (Bernardes, 1997b). The private sector’s immediate response was at best ambivalent: leading private actors continued to press for maximum regulatory freedom, and institutions that had sought full university status expressed public disappointment at the prospect of being designated centros universitários instead (Rossetti & Simões, 1997).
Several reform proposals had already diagnosed the inadequacy of the existing framework — most notably the report produced by the National Commission for the Reformulation of Higher Education (CNRES, 1985), “Uma nova política para a educação superior” — which articulated the need for a new legal framework combined with a national evaluation system, anticipating the direction the Cardoso government would eventually take.↩︎
This alternative explanation is often underemphasized in the comparative political economy of education literature. The mechanism is straightforward: during periods of accelerated economic growth, especially when growth is driven by higher-skilled jobs, more people are both able and willing to pursue further education. During economic crises, by contrast, incentives to remain in school weaken while constraints intensify. As household income falls, the opportunity cost of continued study rises, and both the direct and indirect costs of education become more burdensome. This account helps explain episodes of tertiary education contraction associated with economic downturns rather than party politics alone, as in Sweden in the 1980s (Ansell, 2010).↩︎
A comprehensive list of relevant legislation, including the decrees discussed here, is provided in the appendix (legislation tab), where these normative acts are organized and documented.↩︎