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

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World Bank
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.
World Bank. 2011. Chile's State-Guaranteed Student Loan Program : Analysis and Evaluation; Programa de Crédito Con Aval del Estado (CAE) de Chile. © Washington, DC. License: CC BY 3.0 IGO.
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