Thousands of Chileans who financed their university studies through state-backed student loans are facing the seizure of funds from their bank accounts over unpaid debts. File Photo by John Angelillo/UPI | License Photo
June 17 (UPI) -- Thousands of Chileans who financed their university studies through state-backed student loans are facing the seizure of funds from their bank accounts over unpaid debts, a measure that has sparked controversy over the methods being used by the government of President José Antonio Kast to recover public resources.
The State-Guaranteed Student Loan program, known by its Spanish acronym CAE, was created in 2005 to allow students to obtain loans from private banks backed by a government guarantee. Delinquency rates have risen steadily over the years, generating debt that now exceeds $4 billion.
As part of a public debt recovery plan, Chile's Finance Ministry instructed the Treasury to begin collection efforts against more than 550,000 borrowers in default. Those who fail to regularize their situation through payment agreements face mandatory withdrawals from their bank accounts to repay their debt.
A study by Acción Educar found that as of December 2025, 61.4% of student loan borrowers were delinquent, while fewer than 30% were current on their payments.
