A proposed $1.23 billion boost to education spending through business taxation was dismissed as inadequate by representatives of students who say the education system benefits a privileged minority, leaving the bulk of youths struggling with high fees, exorbitant loans and poor amenities.
Critics say Chile's controversial education system, criticized by teachers and trade unions, doesn't square with the country's economic boom, built on copper prices, a surging stock market and growth in other industrial sectors.
Chile is the world's No. 1 copper producer, its export earnings supplemented by international sales of wines, vegetables and other commodities and minerals.
Chilean central bank data showed an increased growth forecast for this year likely to exceed previous estimates. Growth this year is set to reach 4.75-5.25 percent and continue through next year, the regulatory bank's data indicated.
The bank said in its quarterly outlook interest rates would remain stable in the short term and inflation would stay around 2.5 percent this year and 3 percent in 2013.
The bank's optimistic economic outlook contrasted with the government's restrained response to the biggest political and security threat facing Pinera. Student protests have galvanized other sectors of society that want workable education reforms and an end to civil unrest.
Waves of student takeovers caused disruptions in the capital after the announcement of tax changes to fund education reforms, passed by Congress.
Hundreds of student protesters occupied various political party headquarters to express anger at the new legislation, The Santiago Times reported.
High school students took over the headquarters of the center-left Christian Democratic Party, the far-right Independent Democratic Union Party and the liberal Party for Democracy, while the Socialist Party headquarters was occupied by university students.
High school students also tried to occupy the Communist Party headquarters. While most headquarters were taken peacefully, protesters stormed the right-wing Independent Democratic Union headquarters, throwing rocks and smoke grenades, UDI youth league President Alvaro Pillado said.
Students are angry with the politicians for not doing more to push for reforms that will benefit the deprived majority that opposes the country's private and commercially oriented education system.
Pinera in a televised address pledged greater student participation in breaking the impasse.
"A message for the students," Pinera said. "I know you are not responsible for the problems that face our education system today but I do know that you should be part of the solution."
Student leader Gabriel Boric said there was need for a greater student role in resolving issues.
"We do want to be part of the solution," Boric told CNN Chile. "We are not here just to say 'this is bad' and 'I don't like this' but we will not accept the argument by politicians that says 'thanks very much students for bringing this issue to light, now it's our job to resolve it.' We have proposals and we want them heard."
Analysts said the reforms as proposed would not solve the problems that have driven youth into the streets.
Boric said funds raised through taxation on business would "mainly benefit a system of education that produces segregation in our country, and moreover it reinforces the for-profit education system."
"This reform does not address the needs of our country today ... At the end of the day both sides are a little uncomfortable with it."
Analysts say Pinera may need to find more funds for education reforms and also muster the political will to dismantle entrenched structures, discouraging privileged and powerful vested interests that have thwarted attempts at reform.