Fynsa
A few weeks ago, we all heard or read about the announcement of the progressive cancellation of the Crédito con Aval del Estado (CAE).
Since its implementation, the CAE has been a crucial tool in Chile to facilitate access to higher education and technical training centers for thousands of Chilean families. and Technical Training Centers for thousands of Chilean families.. However, with the passage of time, the dream of many of them to access higher education has not necessarily meant better job opportunities, nor higher future income, which has even made it difficult to pay the loan itself.
In 2011, during the first government of Sebastián Piñera, an important step was taken by reducing the CAE interest rate from 6% to 2%. by reducing the CAE interest rate from 6% to 2%.. In addition, income-contingent payments contingent on the income of the beneficiarieswith a maximum maximum payment that could not exceed 10% of their monthly income.. This measure benefited 365 thousand debtors, which for many appeared to be a partial solution.
The second government of Sebastián Piñera attempted in 2018 to introduce significant changes to the educational credit system in Chile. The proposal included several measures:
Despite the attractiveness of these proposals, the Executive's message did not advance in the parliamentary process, and the bill ended up being shelved.
Up to December 2023, the CAE has benefited 1,219,300 people, accumulating a total credit balance of UF 283 million. Of this amount, 58% has been financed by the Treasury and 42% by the banks. In terms of guarantee payments alone, theThe Treasury has disbursed more than US$ 1,257 million.
A recent simulation estimated that the current government's initial proposal to universally forgive CAE debt would cost around US$ 11.9 billion. would cost around US$ 11.9 billionwhile forgiving only the debt of students who dropped out would cost US$ 1.2 billion. The cancellation is equivalent to 3.7 points of the GDP, represents almost 90% of annual spending on education, equivalent, for example, to building 260,000 social housing units. building 260,000 social housing units (today 50,000 a year are built).
More targeted debt forgiveness alternatives have also been considered. For example, there are those who have proposed forgiving the debt of those with balances remaining prior to the 2012 reform, which would benefit 300,000 people, at a at a cost of US$ 4 billion..
In my opinion, credit is a noble idea that made it possible to broaden access to higher education, but it did not produce the expected results.
Over the years, the tax authorities have reduced the effectiveness of their collections. In 2012, the Revenue Commission demanded payment from 16,224 debtors and the Treasury managed to withhold money from 3,365 (21%). In 2023, more than 300 thousand debtors were pursued, but Treasury only executed the recovery to 34 thousand (11%). The largest figures speak of costs of $9 billion until 2023. Its mismanagement generated increasing costs for the Treasury, higher subsidies for banks, the growth of university institutions that did not necessarily meet basic quality standards, and a level of indebtedness of young people that compromises their future income. All this has translated into uncertainty and default.
We cannot deny that the system has undergone improvements and that it probably needs a new, more in-depth review. Any new proposal to improve this financing mechanism should reconcile the need to relieve debtors with the financial sustainability of the system.
At this time, considering the needs of the country in different areas, including, by the way, education, it is irresponsible to propose a universal cancellation of this loan. It is regressive and inequitable. Regressive, because it would probably benefit people who can pay, and inequitable because a forgiveness to those who owe it punishes thousands of young people who have finished paying it with great effort.
The discussion on the improvement of the higher education financing system is crucial for the future of thousands of young Chileans who aspire to have tools that will allow them to improve their quality of life. A key aspect of the proposed mechanism is that it must include incentives to continue paying for it, only in this way will it be possible to guarantee that access continues to be an engine of development and equity in the country.
