Financials
Brazilian Education: The silver lining of Education amid a testing regulatory environment
Challenging times can create attractive opportunities.
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Financials
Challenging times can create attractive opportunities.
Educational institutions in Brazil provide higher education services to over 9.4 million students. Private institutions have been the main drivers of expansion in the number of students and are responsible for roughly 78% of the student base. As the number of students has consistently increased in past years, distance learning courses have been key for that growth. Distance learning courses are often associated with more accessible tuition fees compared with traditional on-site learning.
More recently, the combination of a decreasing on-site student base and a highly competitive distance learning market made the sector's total revenue pool shrink 18% between 2015-2022, according to published data from Hoper Education.
How has the market recently reacted to Brazil's education environment?
Brazil's education sector has been affected by regulatory discussions, which could impact growth expectations in two main growth drivers: medical and distance learning courses. Also, challenges in how to foster sustainable industry growth have led to debates over consolidation among the main players.
What are the impacts of distance learning regulation?
The Ministry of Education (MEC) aims to increase scrutiny and enforce higher quality into distance learning courses. As such, one of the main topics of debate over a new regulation for distance learning courses is a potential increase in on-site activities, which could negatively impact the institutions’ costs. We believe it might be hard to precisely assess potential impacts until December 2024 (expected date of the new regulation announcement). In the meantime, the creation of new distance learning courses has been frozen by the MEC.
Medical courses: Will seats from injunctions and Mais Médicos III cause a pivotal change in the sector?
In the past 10 years, medical seats more than doubled in Brazil, boosted by the creation of the Mais Médicos (more doctors) program. This program is a Brazilian Government initiative that expanded medical school places to help address the acute shortage of doctors in the public health system. However, amid the restrictive regulations that came after the program, seats started growing at a slower pace in recent years, which led to an imbalance between demand and supply of medical seats, creating an industry with high tickets and margins. More recently, the announcement of the third edition of Mais Médicos and the decision from the Supreme Federal Court that established the standards to evaluate pending requests for new medical courses via injunctions, raised concerns about a possible oversupply of medical seats.
Our summarized view of the three major sector debates:
Brazil's education sector has been affected by regulatory discussions, which could impact growth expectations in two main growth drivers: medical and distance learning courses. Also, challenges in how to foster sustainable industry growth have led to debates over consolidation among the main players.
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