Higher education companies in Brazil are lobbying the government to rescind new rules on financial aid they fear will stop students from enrolling for privately provided education.

A federal decree quietly published during the Christmas period tightened the criteria for the Student Financing Fund (FIES), one of the federal government’s two key initiatives to support individuals studying in private higher education institutions. Students may no longer benefit from both FIES funding, which involves low-interest loans, and the ministry of education’s University for All (ProUni) scheme, which provides scholarships. The ministry also set a minimum score for Enem, the national high school exam required for many university applications.

Private education providers are surprised by the changes, which are expected to reduce the number of individuals able to study at for-profit institutions, and they promptly caused a dive in the market value of Brazil’s biggest higher education companies. When the decree was published, the share price of Kroton Educacional, which has 125 higher education institutions across 83 Brazilian cities and a total enrolment of more than a million students, fell from R16.62 (Rs.84) to a low of R12.22 (Rs.60). Since the start of the year, the four biggest companies have lost a total of R6.7 billion (Rs.3,388 crore) in value, according to stock exchange figures quoted in news magazine Veja.

An industry body, the Brazilian Association for the Development of Higher Education (Abraes), has been negotiating with the ministry of education over the changes, according to a statement from Kroton, but new guidelines have yet to be drawn up. Among other private higher education companies challenging the rule changes are Estacio, Anima Educacao, Laureate and DeVry.

Meanwhile, the National Federation of Private Schools (Fenep) has filed a legal challenge with the federal courts questioning the decree’s legality and seeking its suspension. “Those who use FIES are state-educated pupils, who generally receive a lower quality of education. So the government is penalising these students twice because it also hinders access to finance,” Amabile Pacios, the president of Fenep, told the financial newspaper Valor Economico.

The ministry of education has defended the changes, arguing that they are in line with the government’s goal of improving quality.

(Excerpted and adapted from )