A new bill introduced on April 13 [1] seeks to reform how the Treasury General of the Republic collects state-guaranteed student loans in Chile.

The proposal focuses on the Crédito con Aval del Estado, known as CAE, which has faced scrutiny over the methods used to recover funds. This legislation matters because it addresses the legal requirements and transparency of bank retentions used to satisfy these debts.

Alberto Precht, a lawyer for the program "Buenos Días a Todos," said the current collection methods are utilized by the Treasury General of the Republic [1]. Precht said the mechanisms of bank retentions and how the government manages the recovery of CAE debts from borrowers [1].

The legislative effort aims to establish stricter requirements for legality and audit processes during the collection phase [2]. By implementing these changes, the government intends to ensure that the process of retrieving student loan funds is transparent and subject to oversight [2].

The bill specifically targets the capacity of the debtor to pay, proposing an adjusted approach to how collections are handled to avoid undue financial hardship [2]. This shift would move the Treasury toward a more regulated framework for bank retentions, a process that has historically lacked comprehensive public audit trails [2].

Precht said that the current system requires a clearer legal basis to protect the rights of the borrowers while ensuring the state recovers the necessary funds [1]. The proposed reforms would create a standardized set of rules that the Treasury General of the Republic must follow when executing retentions against a debtor's accounts [2].

“A new bill introduced on April 13 seeks to reform how the Treasury General of the Republic collects state-guaranteed student loans.”

The move toward a more transparent and audited collection process suggests a response to long-standing criticisms regarding the aggressiveness and legality of CAE debt recovery. By adjusting collections based on the debtor's actual capacity to pay, Chile is attempting to balance the fiscal necessity of loan recovery with the socioeconomic reality of its graduates.