Chilean President Sebastian Pinera, facing student protests, has proposed the creation of a $4bn (£2.5bn) fund for higher education.
In a televised speech, Mr Pinera outlined measures including more grants and cheaper student loans.The fund would be partly financed by revenue from the main export, copper.
Thousands of students have been protesting to complain of financial hardship and to call for a reform of Chile's "unequal "education system.
"It's time to stop the protests and recover the way to dialogue and agreements," Mr Pinera said on Tuesday.
Announcing the plans for the $4bn fund, President Pinera said the "great mission of improving education in Chile required an enormous financial effort".
As well as more grants and student loans, Mr Pinera said the government would look at improving the admission and accreditation systems of the universities.
State's role He said the overall system should be re-examined to differentiate between types of universities, with private colleges paying taxes that could be reinvested in scholarships and loans for poorer students.
But Mr Pinera said said a move to an entirely state-run education system, as demanded by protesters, would be a mistake that would "profoundly damage the quality and freedom of education".
High school and university students have been protesting for several weeks, calling for greater government investment in public education.
Among other demands, the demonstrators want secondary schools, currently run by municipalities, to be under central administration.
Reacting to Mr Pinera's proposals, student leaders indicated their protests would continue to seek a more equal education system.
The student demonstrations come at a difficult time for the Chilean leader, who has seen his approval ratings fall to 36% from a high of 63% during the rescue of the 33 trapped miners last year.
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