SEATTLE — “Brazil had a complete mismatch between supply and demand. There was a huge part of the public that couldn’t gain access to higher education in Brazil,” Frederico Brito e Abreu, Chief Financial Officer at the Brazilian leading education group Kroton Educacional S/A (Kroton), said in an interview at the LatinFinance Forum in São Paulo.
Higher education in Brazil is key to furthering the country’s growth, as it provides income opportunities and the potential for families to lift themselves out of poverty. Yet, free public universities with only 230,000 places cannot meet the demand for higher education of about three million students in Brazil, a country where fewer than one in ten Brazilians has a college degree. In fact, annual public expenditure on public institutions per capita was of $2,985 in 2011, the second lowest among all OECD and partner countries.
Quality is also very concerning. “While the super-rich are looking for status as always, families whose lives have improved in recent years want their young to escape from the routine of violence and sexually-charged atmosphere we see in public schools,” said Marco Gregori, a former for-profit college executive.
Under these circumstances, the corporate sector has taken the responsibility to boost education in Brazil and offered viable solutions with the assistance from the Brazilian government. By 2014, the education sector alone has raised approximately $1.1 billion with a market value exceeding $7.9 billion since 2012.
The government granted loans from the Fund of Student Financing (FIES) to those poor Brazilians who cannot afford private institutions with low interest rates and long repayment options so that they can gain access to higher education and the middle-class in the future.
Meanwhile, many for-profit institutions have developed innovative curricula that are geared to students’ employability. For instance, Kroton, the world’s largest education company with a combined 1.6 million students, has adopted innovative applications of technology such as online sources and satellite broadcasting of lectures across all Brazilian states. It has produced graduates who have seen their incomes grow by a higher multiple than students in any other OECD countries.
In addition to boosting demand, these programs have helped to raise standards of education in Brazil. The children of people who did not have many opportunities before now are able to access affordable, high-quality education, unveiling their paths for social mobility.
In fact, the World Bank predicted in its Global Monitoring Report 2015/2016 that Brazil’s current education reforms would lead to increased labor-force participation and labor-specific productivity, potentially reducing the population living in extreme poverty from 4.8 percent in 2015 to 3.6 percent in 2030.
However, limped in its recession, Brazil’s government has cut the number of low-interest loans offering for poorer students to attend for-profit colleges since last year, significantly destabilizing the source of financing for students. In response to this policy shift, private institutions like Kroton are working on a joint venture with banks to provide financing for higher-education student loans, hoping to keep the momentum and optimism in higher education in Brazil.
– Yvie Yao