This distinction was needed because the Pinochet regime changed the higher education system, effectively dismembering public universities (like the Universidad de Chile or the Universidad Técnica del Estado) and Catholic universities.
This decision, which can be seen as a punitive action against highly "unstable" institutions, or as a mean for better control, also included the opening of the education market, effectively allowing any private citizen to establish a higher education institution.
Several small private universities arose after this, most of them directly linked to the dictatorship government members.
Since the 1970s, these universities have managed a common higher education admissions test known as the Prueba de Aptitud Académica ("scholastic-aptitude test") and, since 2003, as the Prueba de Selección Universitaria (PSU, "university-selection test").
Some of the more academically accomplished and/or ambitious new private universities, dating from the 1980s and chiefly set up by political groupings, Catholic sects or entrepreneurs, subscribe to PSU for all undergraduate admissions.