Brazil Recession: The Impact on International Education

brazilThis year Brazil fell into a deep recession as the numbers continued to show more and more unfavorable evidence that the light at the end of the economic tunnel was dimming. As indicators continued to confirm that Brazil was in a recession, many people in international higher ed have been concerned about the impact on international students and exchange visitors coming to the US, especially as Brazil is the #6 sender of students to the US.

What Do The Numbers Say

Brazil is officially in a recession: the stock market is down 20% over last year, the economy contracted 1.9% in the second quarter compared to the first, investment in Brazil fell 12% in the second quarter compared to last year, unemployment hit 7.6% in August, Standard & Poor’s decided to downgrade Brazil’s economy to junk status, and on September 22nd the currency hit its lowest-ever value on record to 4.0665 reales per dollar. Combine this with the fact that Brazil’s main commodities – oil, sugar, and metal – have all fallen in price, and Petrobras – Brazil’s state-run oil company – is in a corruption scandal that has been linked to business and political leaders in the country. The bottom line: things are not looking good.

Translation into International Ed

This is especially bad news as Brazil is the second largest economy in the Western Hemisphere after the US and the seventh largest economy in the world. There are reasons to believe that with such a large economy linked to global markets that these troubles could eventually travel internationally as well. What had once been a Mecca of recruitment for schools and agents, it appears to be fizzling out – at least for now. This could be a blow to schools and agencies around the world, as there were 23,675 international students in the US in 2014-15, up staggeringly 78.2% over the year before. No one seems to be holding their breath that this growth will be sustained in years to come.

In the field of international education, colleges and programs are scratching their heads trying to make sense of this. According to a recent survey by BMI, 61% of agents are expecting fewer students to go abroad compared to 2014 – however 39% said they expected an increase. While the results of the study show a difference in opinion, that difference could rest on the notion that families have savings, and have already put aside money for their children to study overseas. This suggests instead, that the international education field may feel the true impact of the recession over the next few years and not immediately. Moreover, the types of programs that students are pursuing and the location of those programs will matter more than ever.

Shift in Programs

With less disposable income and a poor financial outlook on the economy, Brazilian families are going to have to think long and hard about what programs are worth investing in. According to Victor Hugo Basseggio, owner of CI, one of Brazil’s top agencies, “The sharpest impact has been on the confidence of our prospect students to spend their money.” Doing an English language program abroad may no longer make sense, especially when they can take language courses back home (with the added advantage of paying in reales). Instead, families may not send their child to a language course abroad and instead invest their money into a bachelor’s or graduate degree instead where the rewards seem greater and more tangible.

Scholarships Matter

Not only will programs be further scrutinized by families, but a greater importance will be placed on scholarships and other aid to help fuel student’s ability to afford their study abroad. Programs like the Science Without Borders (Ciência sem Fronteiras, or CsF) – a one-year, non-degree program for Brazilian college students in STEM majors – are going to be even more important if Brazil wants to continue to send a large number of students to the US and other countries. Not good news, though, considering that the pressure on public finances has suspended new scholarships in 2016. Schools will also play an important role, where they will be evaluating their diversity profile on campus, and determine whether aid should be extended to these students as well.

Location, Location, Location
In addition to these considerations, families will also be evaluating the location of their program. Mr. Basseggio went on to say, “Canada, Ireland, Malta, New Zealand, South Africa and Australia are all taking tremendous advantage of their weaker currencies and are therefore regaining the market share they once had. USA and UK are in for a bad spell of weather due to their overvalued currencies.” Families will be spending a lot of time comparing costs, and asking themselves:

  • What is the cost of living?
  • What is the exchange rate?
  • Will I be able to work in my host country during my studies?
  • Will I be able to work in my host country after I complete my studies?

Visa work restrictions during and after a student’s program will greatly influence the ultimate decision of if and where to go. These and other questions will impact the competitive advantage of countries to compete for these students.

About Jennifer Frankel

Jennifer is the Director of Financial Services at Envisage International. Jennifer is a graduate of the University of Florida where she holds a Masters in International Business and a Bachelors of Science in Business Administration. She has lived and worked abroad in Chile, Costa Rica and London, and traveled extensively in South America, Europe and Asia.
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One Response to Brazil Recession: The Impact on International Education

  1. Bill McKean says:

    Jennifer,
    Thanks for your interesting post. I had no idea Brazil was the #6 sender of students to the U.S. I also had no idea thinks were so economically bad in Brazil. But, do not feel alone, I think many other countries are in bad shape and even the U.S. is heading your way to some degree.
    I had no idea of Brazil’s high standing in the western hemisphere and the world. I do agree that many of Brazil’s economic issues will travel internationally. It will be interesting to see if students going abroad from Brazil decreases dramatically once the effects start impacting.
    Program selection and location could be a big change as you note with many who could go abroad, staying home and saving big expense. You are very right that scholarships and aide will become huge factors in determining if students go and if they go, where they go. Thanks for your post. Thanks, Bill.
    V/R McKean

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