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Education investment and reforms in Chile

After the long lasting student protests in Chile demanding for education reforms (see ACA Newsletter – Education Europe, October 2011), some signs of improvement from the government have started to take shape.

Earlier this month, the new draft budget for 2013 was presented – just over USD 12.8 billion will be allocated to education (approx. EUR 9.9 billion), representing an increase of USD 1.2 billion, the largest in the past five years. This means that 4 in 10 Chilean pesos will be invested in education. The main tenet in the current budget is to support the most vulnerable students and the ones with fewer resources across all levels of education, from early childhood to higher education.

In the area of higher education, science and technology, the budget for 2013 is USD 2.3 billion rounded up (approx. EUR 1.7 billion), reflecting an increase of 10.3% compared to the 2012 budget (USD 2.066 billion). The funds allocated to state universities in the period of 2011-2013, amounting to USD 310 million, represent an increase of 24% compared to the funds available between 2007-2010. It is also expected that in 2013, 34 000 scholarships for higher education will be awarded to students belonging to the 60% of the most vulnerable population and middle-class cohort, in contrast to the 118 000 scholarships awarded in 2009. The funds available for research will also increase in 2013, allowing the funding for an extra 1 207 scientific projects. The funds will amount to USD 210 million (approx. EUR 162 million), an increase of USD 28 million compared to 2012.

In the end of September, the Chilean President – Sebastián Piñera – and the minister of education – Harald Beyer – have also enacted a law providing benefits for the higher education students covered by the state-guarantee credit (Ley Crédito con Aval del Estado). This new law will benefit the current 365 000 and future borrowers of the loan and establishes two main measures that will directly benefit students. First, the annual interest rate of the loan will decrease from around 6% to 2%, representing a drop of 40% in the amount of students’ monthly payments. Second, the loan payments will be contingent on individual’s income. For the beneficiaries of the loan prior to 31 December 2011 and after that date, the monthly payments of the loan cannot exceed 10% of the average total income earned during the previous 12 months. In case the amount to be paid exceeds these 10%, the State, specifically the Treasury, will pay the remaining value in debt. The total cost of the measures defined in the new law amount to approximately USD 218 million (approx. EUR 168 million).

Government of Chile – State-guarantee credit law (in Spanish) Government of Chile – Education Budget 2013 (in Spanish)