It was one of his main flags when in 2011, as president of the Student Federation of the University of Chile, he led the massive student demonstrations.
Thirteen years later, now as President of the Republic, Gabriel Boric announced this Monday a project that seeks partially forgive the debt of the Credit with State Guarantee (CAE)a financing mechanism for higher education in that country that since 2006 has allowed a large increase in enrollment, but also a high level of debt.
On national television, the Chilean president detailed a scheme with which he seeks to fulfill one of his main campaign promises, when there are only a few days left for the municipal elections on October 26 and 27. in which his government and the opposition will measure forces.
“Today the CAE is a problem for all of Chile: for those who pay it with great effort month after month, for those who have not been able to do so, for those who could not even finish their studies and are still in debt, and it is also a problem for the fiscal coffers. And when problems affect society as a whole, it is the urgent task of politics to seek a solution and correct it,” Boric stressed.
At BBC Mundo we tell you the scope of the proposal, what is coming and why it has already generated doubts in Chile.
What does the proposal consist of?
The scheme proposed by President Gabriel Boric is divided into two large areas. On the one hand, the one that puts an end to the CAE and creates a new financing mechanism and, on the other, the one that outlines a plan for reorganization and partial forgiveness of educational debts.
A total of 1,219,395 thousand Chileans received this credit between 2006 and 2023. According to the figures provided by the government itself, of that total, 27% are in the study or grace stage, while 73% are in the payment stage, a universe that would benefit from the measure.
The forgiveness plan consists of four stages. The first, called initial forgiveness, will be applied according to three variables: 1) the academic condition of the debtor, that is, whether he has already graduated or interrupted his studies; 2) if the payment is up to date and 3) the number of paid installments of the credit with respect to its total term.
“The academic condition and the payment situation will define the base forgiveness on which, adding the amount of fees paid to the agreed total, the initial forgiveness will be calculated,” the government explained.
After this first calculation, a second forgiveness may be applied, monthly and which establishes that the debtors pay between the 1% and he 8% of your salary, establishing a section exempt from 500 thousand Chilean pesos per month (537 dollars). That is, those who earn less than that amount – which is equivalent to the minimum wage – will be released.
In addition to that, the proposal allows current debtors to choose to pay the total amount owed in a single fee. Those who register in this way “will receive an additional remission equivalent to the 25% of the balance “total debt resulting after the application of the initial forgiveness.”
And finally, a tax benefit is set for the Complementary Global Tax, that is, one that is paid according to income, to reward those who have already paid off their CAE debt. This benefit will last for 20 years.
With this scheme, according to President Boric himself, “more than 75 thousand people will be left with their debt completely settled and thousands will be protected by the payment-exempt section.”
On the other hand, the Chilean government’s plan includes the creation of a new financing mechanism, an instrument that leaves out banks.
This new policy will be called Public Financing for Higher Education (FES) and will allow students to pursue studies in Chilean higher education institutions that are affiliated to the system.
Those who access the FES will not have to immediately pay the fees or registration fees associated with their study plans, but will do so only once they graduate and enter the workforce.
“Only for the 10% with the highest income, the application of a co-payment will be allowed, equivalent to the difference between the regulated tariff and the actual tariff of the institution,” details the government in a statement, a document that at the same time highlights that the FES It does not establish economic or academic requirements for students who want to finance their studies in this way.
This remuneration will depend on income and will be calculated as a percentage of salary, fluctuating between 1% and 8%, establishing, as in the case of forgiveness, an exempt section of around $537.
What’s coming
This Tuesday first thing in the morning, President Gabriel Boric and his Minister of Education, Nicolas Cataldosigned the bill to make this proposal a reality.
The regulations will enter through the Chamber of Deputies of the National Congress Chilean and must be approved by that corporation and then by the Senate. If changes are made in the second procedure, as usually happens, the project will have to go through a third procedure.
That is, until now, it is not clear that the government’s proposal has the path paved to become law in the short term, above all, because it has some regulations that will require support greater than 50%+1 of the National Congress, where Boric does not have a majority.
Added to the above is that the president has only a little over a year to process the regulations, before the presidential elections in November 2025.
In any case, President Boric realized that he has already been willing to make his positions more flexible regarding his original proposal that had greater universal scope, which would extend to the legislative process.
“(The entry of the initiative) we do it aware that the project, just as we imagined it, has been undergoing modifications and we are glad that this is the case. “If you never changed your initial position, politics would have no meaning,” he said.
In conversation with BBC Mundo, the Minister of the General Secretariat of the Presidency of Chile, Álvaro Elizalde, affirms that “We hope that Congress will transversally support the bill that ends the CAEsince it benefits young people and their families, who will see their debt disappear or be significantly alleviated, as well as future students.”
“It is a project that addresses a felt social need without affecting other budget priorities such as security, health and housing. The project establishes greater efficiency in public spending, excluding banks from financing higher education, and relief for debtors,” he adds.
The doubts it generates
The doubts generated by the project are several. And it didn’t take long for them to appear. So much so that President Boric himself echoed some of them in his speech after signing the presidential message that will be submitted to the Legislature.
One of the main ones is politics. In the opposition to his government – made up of the right and the center-right – voices have already emerged that indicate that the president’s commitment would have electoral overtones.
This, due to the aforementioned municipal elections on October 26 and 27, and which are read like a thermometer in the face of the 2025 presidential elections.
Likewise, the opposition has warned that The citizen priority is the security crisis that affects the country, where violent crimes have increased.
“There are those who will say that this is not necessary or that it does not solve a priority problem… I want to tell them one thing: governments can walk and chew gum (…). We know that today security is one of the main concerns of our people (…), but the government has to have its eyes and its actions everywhere,” said the head of state.
In that sense, Boric called for this debate not to become a small fight between his government and the opposition. “Many invited us to evict some of these reforms, but we are stubborn”said.
Another element that has raised doubts, especially because the government has not yet provided details, is how the forgiveness and creation of the new FES service will be financed.
The presentation of the forgiveness project, in fact, was delayed on several occasions during Boric’s mandate. Even in some sectors of his administration it was seen as something impossible after the rejection of the Tax Reform in 2023.
In the government, however, they explain that the State has already had to disburse more than US$9,000 million to finance the CAE, Therefore, only better management of these resources will make the new proposal viable.
“It is a self-contained measure”they emphasize in the Boric administration.
Another element that has generated criticism and has been picked up by the local press is that the measure could end up benefiting the highest quantiles and, consequently, affecting the deficits in higher education institutions.
The rector of the Catholic University of Chile, Ignacio Sánchez, appreciated that the government’s proposal is not about universal condonation.
However, he also assured the newspaper El Mercurio that “what is worrying about the message and the project is that co-payment is only allowed in the top 10% (…). This already occurs in free students and we want to extrapolate to the other deciles, which will deepen the deficit of the institutions“.
The same prevention was made by Sebastián Piñera’s former Minister of Education, Harald Beyer, who expressed in the same medium that “the most complex aspect is that they would extend the free criteria for the nine income deciles”, which – in his opinion – “leaves universities in more unstable positions.”
Given that, the education minister de Boric told BBC Mundo that they know that the project will have to face a long discussion: “For example, with the issue of the tariff issue, which is something that some of the rectors have raised. However, there are many universities that will benefit from this instrument because they will switch to a regulated tariff instead of the reference tariff and, in addition, they will no longer have to pay for the execution of guarantees,” said Nicolás Cataldo.
In relation to doubts about financing, the Chilean authority pointed out that “as the Minister of Finance, Mario Marcel, said, this is not going to have a greater expense than what it is having today for the treasury.”
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