UPDATE: Mexican Government Backs Higher Education Loan Program
January 09 2012 - 4:01PM
Dow Jones News
The government of Mexican President Felipe Calderon announced a
college loan program Monday that aims to lend more than 3 billion
pesos ($219 million) a year to students who wish to pursue some
form of post-secondary education at private institutions, but who
can't afford the payments.
The loans, extended by private sector banks and guaranteed by
government development bank Nafinsa, could help finance education
for 25,000 Mexican students in the initial phase of the program,
Nafinsa said in a statement.
In announcing the program, President Calderon acknowledged that
sending children to private universities in Mexico "implies an
economic power that a good part of the population lacks." The new
loan scheme should bring greater equality to education, and,
eventually, the job market, he said. Calderon added that 60
countries operate similar education loan schemes--including the
U.S., Chile and Brazil--enabling a greater "democratization" of
education.
Mexican students will be able to borrow up to MXN280,000 each
for higher education via credits that mature in 15.5 years and
carry a fixed interest rate of 10%; they will have a six-month
grace period after graduation before they have to start paying back
the loans.
Private sector banks participating in the program include Banco
Bilbao Vizcaya Argentaria SA's (BBVA, BBVA.MC) Bancomer unit,
Spanish financial group Banco Santander SA's (STD, SAN.MC) local
unit, Mexico's Grupo Financiero Banorte SAB (GFNORTE.MX) and HSBC
Holdings PLC's (HBC, HSBA.LN) Mexican unit.
According to Mexico's National Association of Universities and
Institutions of Higher Education, 30% of the country's 2.7 million
students pursuing education above the high school level are
attending private institutions.
Nafinsa said that while state and federal governments, as well
as most private education institutions, offer scholarships, it's
important that Mexico expand access to educational financial aid
for the betterment of both young people and the country.
Mexico's Finance Ministry, together with 21 private institutions
of higher education, are putting forth counter-guarantees to help
mitigate the credit risk of the loans and to secure an attractive
interest rate for borrowers.
Students wishing to access the credit must be Mexican nationals
who have been accepted by one of the 21 institutions involved in
the program. The students must also maintain acceptable grades, and
find a family member to co-sign the loans.
During a pilot program, Nafinsa said, more than 1,200 students
borrowed a total of MXN130 million to pay higher education
fees.
-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177,
amy.guthrie@dowjones.com
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