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Among the colonies of the British Empire, Ceylon, as it was then known, was far ahead of its neighbours with regard to its primary and secondary school systems. Small both in size and population, there had been no freedom struggle involving the masses. Thus, by 1931, the British government felt confident enough to grant universal adult franchise and a substantial degree of responsibility for governance, under what were known as the Donoughmore Commission Reforms. Indeed, seven of the ten ministers in the executive were Ceylonese, with portfolios including education and health care. By 1945, the administration had adopted additional reforms providing free education from kindergarten to the university level. In his concluding remarks marking that occasion, C W W Kannangara, then the minister of education, said: "It is my belief that this is a pearl of great price. Sell all that you possess and purchase it for the well-being of the nation." Today, there is a general consensus among professionals and academics that they would not be where they are if not for the lasting reforms set in motion by the leaders of that era.

Policy changes included, among other things, the provision of more schools. Noteworthy in particular was the establishment of a system of 54 Central Schools in the provinces, and a stage-by-stage transition replacing English with Sinhala and Tamil (also known as Swabasha) as the medium of instruction. The switch to Swabasha took place from grades one to five during the 1940s; by the mid-1950s, it had become the medium of instruction from grades 6 to 12, finally reaching the universities during the early 1960s. It must be emphasised that Tamil-speaking students (Tamil and Muslim) had the same rights as the Sinhalese students, both with regard to free education and the right to education in their own language. This right has been firmly adhered to in spite of subsequent changes making Sinhala the only language of the administration. Education has, however, lagged behind in plantation areas where the hill-country Tamils (those of Indian descent) laboured.

Meanwhile, the older colonial-era secondary schools were called colleges – a misnomer that has survived – as Lanka did not have an affiliated college system of the kind that prevails in India. There were wide disparities among the secondary schools, with the denominational schools in the urban areas, especially Colombo, Jaffna, Kandy and Galle, better equipped and staffed. The quality of education provided by the state improved with the establishment of the 54 Central Colleges following the reforms of the 1940s. These denominational schools were mostly run by Christian missions, though the Buddhist and Hindu boards later became involved as well. The American missionaries landed in the Tamil north early in the 19th century, founding the Batticotta Seminary in 1823 and later the Jaffna College. The following year, they also founded the first boarding school for girls in Uduvil, Jaffna. This marked the beginning of the development of schools among the Tamils, eventually making Jaffna second only to Colombo in education, including proficiency in the English language. Indeed, the advances made by the Jaffna Tamils created tensions that ultimately led to the Sinhala Only Act of 1956. The challenge facing schools in Jaffna today is to restore the standards that prevailed until the 1970s, deeply affected if not decimated by 30 years of war.

State monopoly
In addition to the Central Schools, the island also had denominational schools receiving state grants, which eventually came to be known as assisted schools. When free and compulsory education came into force in 1947, these schools were given the option of joining the free education system, meaning that they would receive assistance but come under some degree of state control, or remaining completely private and charging fees. Most of the religious denominational schools entered the government scheme, and were entitled to state assistance, while providing free education. A handful of Christian schools did, however, choose to stay out of this system.