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  HOME | Chile

Drowning in Debt, the Price of Studying in Chile

SANTIAGO – Antonia Vallejos stares at her computer screen with a mixture of anguish and awe: she has just found out she will have to pay more than 20 million Chilean pesos ($25,000) for her degree.

The 23-year-old is studying nursing at a private university and, as soon as she graduates, will have 20 years to repay the debt and its accrued interest through the country’s tuition fee credit system (CAE), which has come under considerable criticism from Chile’s hard-up students.

Together with basic rights such as healthcare and pensions, the clamor for quality public education has been at the center of the street protests that have rocked the South American nation in recent weeks, leaving at least 22 dead and thousands wounded and detained.

One of the axes of social inequality in Chile as a result of the economic model passed on by the dictatorship of Augusto Pinochet (1973-90) is the higher education system, the commodification of which has lined the coffers of the banks but put hundreds of thousands of youngster in debt.


The CAE was created in 2005 by the government of Ricardo Lagos (2000-06) with the promise of boosting social mobility by granting people from lower-income households access higher education by turning debt into credit.

The number of students has doubled since then. In 2018, there were more than 1,260,000 students, compared to just 600,000 in 2005.

As a result, however, the number of young people in debt reached 725,000 by September last year, according to data from the Sol Foundation, a non-profit organization.

The main gripe for students is the “abusive” interest rates pegged onto the credit, which started at 6 percent of the annual average and end up boosting debt rates.

“I always knew it was a lot of debt, but what option did I have?” Vallejos asks herself.

Her father is also saddled with university debt accumulated under Pinochet and his refusal to pay it back has hit his credit score, leaving him unable to apply for a credit card or buy a house.


Javier Bustos graduated with a degree in sociology seven years ago with a loan totaling 7.5 million pesos but now he owes more than 15 million.

Speaking to Efe, he demanded that all educational debts be forgiven – including those taken on before the CAE was implemented – for both “material and moral” reasons.

He said the State had sold a false promise of social mobility when, in fact, “only the banks earn money.”

In his first term, President Sebastian Piñera (2010-14, 2018-) reduced the CAE interest rates to 2 percent – if debt installments are paid within the first five days of the month – and set a limit of 10 percent on a debtor’s salary payments, although for many these targets remain unachievable.

This was the case for Bustos, who stopped paying the fees. In turn, the State does not return his taxes, which it uses instead to cover the credit, which continues to swell.


The Educational Debt organization, which provides advice for those struggling with loan repayments, sees a “historic opportunity” in the recent outbreak of protests and the possible drafting of a new constitution.

The entity’s spokesperson, Juan Pablo Rokas, told Efe that politicians had to start rebuilding trust by taking such steps as abolishing the laws underpinning the CAE system.

Chile’s Parliament on Friday approved a landmark agreement that paves the way for a referendum in April 2020 in which voters will decide whether they want to replace the existing Pinochet-era constitution with a new one.

Ennio Vivaldi, the rector of the University of Chile, said the State could no longer evade responsibility for having sold a poor product.

“Those who promoted turning education into a business did not see that, by destroying the public system, they were undermining national and social cohesion.”

Benjamin Saez, a researcher at the Sol Foundation, said a debate had been opened on a system that encourages “delinquency,” especially among those who lack financial resources.

Yet students like Vallejos see a complicated future ahead.

“I don’t think that in order to study, I have to be paying back debt until I’m 40, and that is what gives me the strength to protest it every day.”


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