JUNE 7, 2018

President Piñera presents new Higher Education Solidarity Financing System

The Solidarity Financing System could benefit more than 300,000 students. “It guarantees that no student will be excluded due to a lack of money and that a family’s dream of a child earning a degree will not become a nightmare because of debt repayment,” said the President.

Accompanied by Education Minister Gerardo Varela, President of Chile Sebastián Piñera signed a bill to create the Solidarity Financing System, which will replace the current State Sponsored Credit(Crédito con Aval del Estado, CAE) system.

The new system will be managed by a public institution, will not involve the banking industry, and will be available to all Chileans in the lowest nine income deciles who have been accepted to an accredited institution of higher education.

“A quality education is the most powerful tool for developing people, developing a country, conquering poverty, achieving greater equality of opportunity and building a society with comprehensive, inclusive and sustainable development,” stated the President.

All current CAE or Solidarity Fund debtors may voluntarily transfer to the new system if it would be beneficial to them to do so.

“We believe that the Higher Education Solidarity Financing System that we are proposing to the country is significantly different from the old one and is thus a fairer, more equitable, more egalitarian system,” noted the President.

The President explained the main differences between the two systems.

  • The banking industry will not be involved in this new system, which will be managed by the State.
  • Funding will cover regulated tuition; however, the system also allows for additional state funding (up to 1.5 times the regulated tuition rate) depending on the student’s risk level and institutional accreditation and quality.
  • Students from the 60% most vulnerable families will pay absolutely nothing while they are studying and the institutions of higher education that participate in this new system will cover any differences that may arise.
  • Each student’s payment -which will begin after graduation when they have an income- will be capped at 10% of their earnings.
  • After 15 years of repayment, any remaining debt will be forgiven regardless of the amount.

 

“I think that the bill we are presenting today is another step to add to those we have taken before. This is not the job of one administration; it is a job for society as a whole. It is not a job for today; it is a job for yesterday, today and tomorrow. We are taking another step toward making Chile a freer, fairer, more prosperous and more united country,” said the President.

The announcement reflects the government’s priorities on education: improving quality in the different segments and phases of the education system, improving the quality of vocational education, and drastically changing the training system.

“We believe it is essential that civil society as a whole and the entire educational community -educational service providers, principals, teachers, parents and guardians and, very especially, students- commit to this great challenge and noble mission of making giant strides in educational quality,” he said.