WASHINGTON, April 1st, 2014 – The World Bank Board of Directors approved a US$200 million loan today to continue to support the Colombian Institute for Educational Credit and Technical Studies Abroad (ICETEX, in Spanish) and to finance access to higher education for close to 206,000 students from low income families, including native persons, Afro-Colombians and victims of violence.
The project seeks to increase student enrollment and graduation rates as well as equity in Colombia’s higher education by increasing the number of student loans at the Access to Quality Higher Education (ACCES) program. It will place special emphasis on students from disadvantaged backgrounds, facilitating their admittance into quality institutions and higher education programs and ensuring the continuous improvement of ICETEX’s institutional capacity.
The first phase of the ACCES program helped increase enrollment in the higher education system from 1.2 million students in 2006 to 1.8 million in 2012; meanwhile, the number of graduates rose from 146,810 to 241,049 during the same period. Moreover, the percentage of students from disadvantaged backgrounds enrolled in first grade rose from 46 to 58 percent.
“The Colombian Government, following the end of negotiations with the World Bank, is reaffirming its commitment to students by offering them real opportunities to access higher education, considering that educational credit serves as an efficient mechanism to expand higher education coverage, strengthen the quality and relevance of academic programs, and help reduce dropout rates,” said Fernando Rodriguez Carrizosa, President of ICETEX. “The ACCES line of credit strengthens ICETEX’s service portfolio, favors the most vulnerable youngsters — meaning students belonging to strata 1, 2 and 3 — by facilitating their entry into higher education under excellent conditions, including subsidized rates and allowances, as well as by granting loans to students who are mostly minors lacking real guarantees to back their obligations,” Rodriguez Carrizosa added.
The direct beneficiaries of this project include students expecting to study in a higher education institution and those that have already enrolled in one and are beneficiaries of ACCES student loans. Furthermore, ICETEX will be strengthened institutionally with the exploration of further diversification in financing sources and an impact evaluation to, for example, estimate the increase in higher education equity made possible by ACCES loans.
ICETEX will grant new loans according to criteria such as geographical equity (covering remote areas), academic merit, the quality of the higher institution where admittance is being sought and socio-economic level, among others. There will be openings for students deemed most vulnerable by SISBEN (a Government-designed information system to identify potential social program beneficiary families).
“We have been supporting ICETEX since 2002 and we remain convinced that education is a powerful factor that boosts development and is one of the most effective tools for reducing poverty and improving health, gender equality, peace and stability,” said Gloria M. Grandolini, World Bank Director for Colombia and Mexico. “By supporting ICETEX we respond to a request from the national government to help improve access, graduation rates and equity in Colombia’s higher education system,” she added.
ACCES loans are designed to address the needs of low income students by:
- Offering zero real interest rates to students from strata 1, 2 and 3;
- Offering an allowance for the duration of studies to students from disadvantaged backgrounds;
- Offering a debt cancellation rate of 25 to 50 percent to students from disadvantaged backgrounds;
- Establishing a long (and flexible) maturity period equal to two times the duration of studies plus a one-year grace period;
- Allowing repayment in advance without penalties;
- Incorporating flexibility features that can be applied in case of temporary unemployment. These include: the option to delay any payment by one semester, with the possibility of extending it by up to one year.
The support of the World Bank goes in line with the Country Partnership Strategy’s new approach, through which the institution is to provide a comprehensive package of financial as well as knowledge and convening services. This program is also in line with the objective of inclusive growth with greater productivity and expanding opportunities for social prosperity.
ICETEX, guaranteed by the Nation, will be responsible for coordinating, executing and supervising the project. This fixed-margin flexible loan includes a six-year grace period and a 22.5-year maturity period.