ICETEX - a student loan success story in Colombia

Theoretically, student loans are a powerful mechanism to raise higher education, yet, in practice these are perceived as schemes associated with high default rates, and its practicality is questioned. Nonetheless, this paper reviews the Colombian Institute of Educational Credit and Training Abroad (ICETEX) success in higher education finance, and, in mobilizing resources from students, parents, universities, private sector participation, and government institutions at all levels, including ICETEX own investments. It examines Colombia's background in the past 40 years, which not unlike many Latin American countries, faced financial constraints, as well as inequitable access across socioeconomic groups. ICETEX legal, administrative, and financial structures are analyzed, along with its loan portfolio, and interest income. Indicators determine the student's socioeconomic status, and an equal distribution across regions, - taking into account differing population densities, it proportionately provides more aid to less privileged areas - and, assigns priority to disciplines deemed important to Colombia's economic development. Lessons are provided, and it concludes ICETEX is a proven example that educational financing can achieve success, ensuring the likelihood of repayment capacity. The challenge is now to increase loan recovery, while expanding its coverage.