Privatization of FIES will increase financing costs for students.
Brazil's Minister of Education, Mendonça Filho, has signaled his desire to allow private banks into the student financing program. Currently, the program is run by Banco do Brasil and Caixa Econômica Federal, with administration fees ranging from 1,5% to 2% per year. To open FIES (Student Financing Fund) to private initiative, the Ministry of Education will need to increase the program's administration fees, which will mean students will pay more for the financing. FIES is responsible for more than 30% of enrollments in private higher education in the country.
247 - The Minister of Education, Mendonça Filho, has signaled that he wants private banks to participate in student financing. This information, published on Tuesday, the 30th, in the "Lauro Jardim" column, effectively means an increase in the cost of the Student Financing Fund (Fies) for students benefiting from the program.
Furthermore, it represents the privatization of part of the FIES program. Currently, the program is run exclusively by public banks: Banco do Brasil and Caixa Econômica Federal. The administration fees, which vary between 1,5% and 2% per year, are much lower than those applied in the market to private student loan programs.
To open the FIES program to private initiative, Mendonça Filho will need to increase the program's administration fees, which will mean that students will pay more for the financing they receive. The Dilma Rousseff government ruled out the entry of private banks into the FIES program in March.
At the time, representatives from Febraban informed the National Fund for Educational Development (FNDE), an agency linked to the Ministry of Education, that they considered the program's administration fees to be too low. Throughout the negotiation, Febraban also considered the beneficiaries' profile to be high-risk.
More than 2,2 million people have already gained access to higher education in Brazil through FIES. In the first semester of this year alone, 250 places were offered in the program. FIES is responsible for more than 30% of enrollments in private higher education in the country.
According to current rules, students who took the National High School Exam (Enem) from the 2010 edition onwards and obtained an arithmetic average of 450 points or higher across the tests, in addition to a score other than zero on the essay, are eligible to apply for a FIES contract.
Furthermore, a requirement is having a gross monthly per capita family income of up to two and a half minimum wages. Those who already hold a higher education degree are not eligible to participate in the program.