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.