Santiago, Chile / Washington D.C., October 10, 2007 —
IFC, a member of the World Bank Group, has partnered with DuocUC, a higher education institution in Chile, and Banco de Crédito e Inversiones to establish Chile’s first private financing program targeting low-income students. The program will enable over 15,000 students to finance their post-secondary education with long-term competitive loans. By focusing on students from underprivileged backgrounds, this program is addressing an important social need, while providing a means for higher education and better employment opportunities.
Only about 20 percent of the Chilean population can afford to pay for higher education. This is a key challenge in the country. Private banks generally offer higher interest rates for student loans than for consumer loans. At DuocUC, just over 9,000 students (22 percent of enrollment) have taken out loans this year, a significant increase from 2006.
The new student loan program is expected to originate loans totaling 27 billion Chilean pesos (about $51 million) over several years. DuocUC students enrolled in any professional or technical careers will be able to cover the full cost of tuition and will be offered an attractive interest rate, with repayment terms of up to seven years after graduation. Risks will be shared between DuocUC, Banco de Crédito e Inversiones, and IFC. DuocUC will assume the first loss risk of the portfolio of student loans, while IFC and BCI will each cover up to 10.13 billion pesos ($19.2 million) of senior risk. BCI will assume the role of fund provider and administrator of the loan portfolio.
Atul Mehta, IFC Director for Latin America and the Caribbean, said, “This program will help increase access to higher education and boost the number of qualified professionals in the labor market, which is a priority for the Chilean government.”
Guy Ellena, IFC Director for Health and Education, said, “IFC is proud to introduce a new product to Chile’s financial markets—an affordable loan scheme that demonstrates the creditworthiness of lower- and middle-income students with technical and vocational degrees.” He added that student loan schemes are a key component of IFC’s education strategy in Latin America and that IFC is actively pursuing similar projects in other countries.
Marcelo von Chrismar, Rector of DuocUC, noted, “Due to limited student loans for technical careers in Chile, this new program is a key element in our strategy to target students who require financial support. Many of our applicants’ educational needs will be met as a result of this program, given the additional incentive of better employment opportunities after graduation.”
Gerardo Spoerer, Director of BCI Securitizadora, added, “Our commitment to citizenship and corporate social responsibility is evident in our support for this program, especially in addressing some of the social gaps in Chilean society, such as equal access to education regardless of financial status."
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
.
About DuocUC
DuocUC is a nonprofit, fully autonomous private provider of tertiary, professional, and technical education in Chile. In 2007, it enrolled 42,000 students in Santiago, Valparaiso/Viña del Mar, and Concepción. It has 10 campuses and offers 71 courses—32 professional and 39 technical. Its operations are mainly in Santiago, which accounts for 70 percent of the student body and seven of the 10 campuses. Some 64 percent of students come from families classified as middle- and lower-income, of which about 70 percent are the first in their families to receive higher education. DuocUC accounts for nearly 10 percent of all students from the lowest-income quintile enrolled in the Chilean tertiary education sector.
About Banco de Crédito e Inversiones
BCI, one of Chile’s largest banks, was incorporated in 1937 by Chilean entrepreneur Juan Yarur. The bank is still headed by the Yarur family. BCI is a universal bank with 11 subsidiaries and 243 branches across the country, with more than 9,000 staff. The bank is organized around three major business areas: wholesale, small and medium enterprise, and retail banking. In 2004, it acquired what is today known as Banco Nova, to increase its presence in the consumer loan market. Banco Nova, which is now a department within BCI’s retail banking division, will implement the new student loan program.
