Chile's State-Guaranteed Student Loan Program : Analysis and Evaluation

Chile's Programa de Credito con Aval del Estado (CAE in its Spanish acronym) is uniquely positioned to help hundreds of thousands of qualified-but-financially-needy Chileans attend and finish tertiary education. The CAE program was designed to improve access to and equity in tertiary education. In 2010, after only four years of operation, the Program had 216,000 active borrowers or 23 percent of the 940,000 students in pre-grado. Even as the annual number of new beneficiaries levels off, the portfolio will increase for the next several years until reaching a steady state with approximately 460,000 active borrowers by 2016. This report is part of the 2010 Joint Studies Program between the Government of Chile and the World Bank. The purpose of the study is three-fold. First, to evaluate the impact of this program on access to and equity in higher education, taking into account the effectiveness of targeting qualified but financially needy students and its complementarities with other major student aid mechanisms. Second, to understand the size of the economic commitment the Chilean Government has made with this program, both in terms of its investment to date and its contingent liabilities. Third, to formulate recommendations for improvements going forward. The first chapter summarizes CAE's legal framework and institutional arrangement, explains how the CAE system functions, and describes the main characteristics of the loan product. The second chapter presents a brief overview of CAE's structural cost according to current program design and briefly describes the model used to calculate CAE's actual cost. The results of the latter are then included throughout the rest of the report as appropriate. The remaining parts of the chapter focus on CAE's stakeholder's students, tertiary education institutions, financial entities, and the Government of Chile and explore and analyze the impact the CAE program has had on them. The third and final focuses on recommendations for improving CAE: increasing loan repayment rates, lowering capital costs of loan origination, and increasing the coordination of CAE with other student aid programs. The end of the chapter then shows what the financial impact of these recommendations might be for the Government of Chile.

Bibliographic Details

Main Author:	World Bank
Format:	Other Education Study biblioteca
Language:	English en_US
Published:	Washington, DC 2011-03-08
Subjects:	ACADEMIC PERFORMANCE, ACADEMIC YEAR, ACADEMICALLY QUALIFIED STUDENTS, ACCESS TO FINANCING, ACCESS TO TERTIARY EDUCATION, ACCESSIBILITY, ACCOUNTING, ADMINISTRATIVE COSTS, ALTERNATIVE SOURCES OF FINANCING, AMOUNT OF CREDIT, ANNUAL PAYMENTS, ASSETS, AUCTION, AUCTION PROCEDURES, AUCTION TECHNIQUES, AUCTIONS, AVERAGE DEBT, BANK POLICY, BANKS, BASIS POINT, BASIS POINTS, BENEFICIARY, BID, BIDS, BONDS, BORROWER, BORROWING, BORROWING CAPACITY, CAPITAL COSTS, CAPITAL MARKETS, CAPITAL REQUIREMENTS, CAREERS, CASH FLOW, CASH FLOW ANALYSIS, CASH FLOWS, CASH ON HAND, CASH OUTFLOWS, CASH TRANSFER, CENTRAL BANK, COLLECTION EFFORTS, COLLECTION PROCESS, CONTINGENT LIABILITIES, CONVENTIONAL MORTGAGE, CREDIT BUREAU, CREDITS, DEBT BURDEN, DEBT BURDENS, DEBT LEVELS, DEBT PAYMENT, DEBT PAYMENTS, DEBT REPAYMENT, DEBT SERVICE, DEBT SERVICE RATIO, DEBTS, DEFAULT RATES, DEFAULTERS, DEFAULTS, DEGREE PROGRAMS, DEGREES, DEPENDENT, DEVELOPING COUNTRY, DEVELOPMENT CORPORATION, DISBURSEMENT, DISBURSEMENTS, DISCOUNT RATE, DIVERSIFIED PORTFOLIO, DROPOUT RATES, EARNINGS, ECONOMICS OF EDUCATION, ECONOMIES OF SCALE, EDUCATION LOAN, EDUCATION SECTOR, EDUCATION STUDENTS, EDUCATIONAL BACKGROUNDS, EDUCATIONAL LOANS, ELIGIBILITY CRITERIA, EMPLOYEE, EMPLOYER, EMPLOYERS, EMPLOYMENT, ENROLMENT RATES, ENROLMENT SHARE, EQUAL TREATMENT, EXCESSIVE DEBT, FACE VALUE, FAMILIES, FAMILY INCOME, FINANCIAL ASSISTANCE, FINANCIAL DIFFICULTY, FINANCIAL NEED, FINANCIAL NEEDS, FINANCIAL OBLIGATIONS, FINANCIAL SYSTEM, FISCAL RESOURCES, FIXED INTEREST, FIXED INTEREST RATES, GLOBAL DEBT, GOVERNMENT GUARANTEES, GRACE PERIOD, GRADUATION RATES, GRANT PROGRAMS, GROSS DOMESTIC PRODUCT, GROSS TERTIARY ENROLLMENT, GUARANTY, HIDDEN SUBSIDY, HIGH DEBT SERVICE RATIOS, HIGHER EDUCATION, HUMAN CAPITAL, HUMAN RIGHTS, INCOME GROUP, INDIGENOUS SCHOLARSHIP, INDIVIDUAL LOAN, INFLATION, INFORMATION SYSTEM, INFORMATION SYSTEMS, INSOLVENCY, INSTITUTIONAL ARRANGEMENT, INSTRUMENT, INSURANCE, INSURANCE POLICY, INTANGIBLE, INTEREST RATE, INTEREST RATES, INTERNATIONAL STANDARDS, INVESTMENT FUNDS, JUDGE, JUDGMENTS, LABOR MARKET, LEARNING, LEARNING OUTCOMES, LEGAL ACTIONS, LEGAL FRAMEWORK, LEGAL PROCEDURES, LENDERS, LEVERAGE, LEVERAGES, LIQUIDITY, LOAN AMOUNT, LOAN AMOUNTS, LOAN BALANCE, LOAN BALANCES, LOAN DOCUMENTATION, LOAN GUARANTEES, LOAN PAYMENTS, LOAN PORTFOLIO, LOAN PORTFOLIOS, LOAN PRINCIPAL, LOAN PRODUCT, LOAN PRODUCTS, LOAN RECOVERY, LOAN REPAYMENT, LOAN REPAYMENT RATES, LOAN REPAYMENTS, LOAN SERVICING, LOAN SIZE, MANDATE, MINIMUM WAGE, MINISTRY OF EDUCATION, MORTGAGE, NATIONAL ACCREDITATION, NEEDY STUDENTS, NEGOTIATIONS, OPPORTUNITY COST, PAR VALUE, PENSION, PENSIONS, PREPAYMENT, PRIVATE BANKS, PRIVATE CREDIT, PRIVATE CREDIT BUREAU, PRIVATE UNIVERSITIES, PROFESSIONAL DEGREE, PUBLIC FINANCE, PUBLIC POLICY, PUBLIC SUBSIDIES, RATE OF RETURN, RATES OF RETURN, REAL INTEREST, REAL INTEREST RATE, REMAINING DEBT, REPAYMENT, REPAYMENT BEHAVIOR, REPAYMENT OBLIGATION, REPAYMENT PERIOD, REPAYMENT PERIODS, REPAYMENT RATE, REPAYMENT RATES, REPAYMENTS, RESEARCHERS, RESERVES, RISK-FREE RATE, SAVINGS, SCHOLARSHIP PROGRAMS, SCHOLARSHIPS, SECOND LOAN, STATE GUARANTEE, STATE GUARANTEES, STUDENT AID, STUDENT ASSISTANCE, STUDENT DEBT, STUDENT FINANCIAL AID, STUDENT LOAN, STUDENT LOAN BENEFICIARIES, STUDENT LOAN PROGRAM, STUDENT LOAN PROGRAMS, STUDENT LOANS, SUBSIDIZATION, T-BILLS, TAX, TAX RETURNS, TEACHERS, TEI, TERTIARY EDUCATION, TERTIARY EDUCATION INSTITUTION, TERTIARY EDUCATION INSTITUTIONS, TERTIARY EDUCATION SYSTEM, TERTIARY ENROLLMENT RATE, TERTIARY INSTITUTIONS, TOTAL DEBT, TRANCHE, TRANCHES, TRANSFER PAYMENT, TRANSPARENCY, TUITION, UNDERGRADUATE DEGREE PROGRAM, UNDERGRADUATES, UNEMPLOYMENT, UNIVERSITIES, UNIVERSITY DEGREE, UNIVERSITY ENTRANCE, UNIVERSITY STUDENTS, VETERINARY MEDICINE, WRITTEN COMMUNICATIONS,
Online Access:	http://documents.worldbank.org/curated/en/2011/03/16406290/chiles-state-guaranteed-student-loan-program-cae http://hdl.handle.net/10986/12954
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