Student leader says the government still treats education as a consumer product, rather than a universal right.
Thousands of students are marching in Chile again demanding free and better education.
The government said about 30,000 students joined Wednesday's march in Santiago. Student leaders estimate more than 50,000 took part. A small group of protesters set a guard booth on fire, tried to vandalise a traffic light and threw rocks at police, who responded with water cannons.
President Sebastian Pinera is offering his own solution to the country's education woes, a tax bill he plans to present to congress on Thursday that should raise $700 million to make the Chile's largely private system more accessible.
"This is a very profound change. It seeks quality and equal education. It establishes a system of credit that favors 90 per cent of the students, and the state will provide the resources," Pinera said in national television broadcast. "Businesses will have to pay more taxes."
Education Minister Harald Bayer says the march was not justified, noting that on Monday the government announced the creation of a state agency to replace private lenders and reduce the interest rate on student loans from 6 per cent to 2 per cent.
However, student leader Gabriel Boric said the government still treats education as a consumer product, rather than a universal right.
Students want to return the government to the center of Chile's largely privatised education system, while Pinera's government has instead sought to lower lending costs and otherwise make private educations more accessible to working classes.
Pinera said the effect of his tax plan would be "huge," providing not only for loans but for scholarships for the neediest students. He planned to meet with leaders of his center-right governing coalition to discuss more details before unveiling the plan.
Pinera's tax bill faces opposition from both the left and right in the Senate. Socialist lawmakers want more profound changes to the tax system, so the burden falls far more heavily on corporations that have reaped the benefits of a commodities boom in Chile, the world's top copper producer. The president's right-wing allies want the government to reduce taxes on fuels that they say feed inflation.