Lula minimizes default on Fies – 01/19/2023 – Education

President Luiz Inácio Lula da Silva (PT) minimized defaults on Fies (Student Financing Fund), which reaches 2 million people. The petista indicated that the program will be resumed and expanded.

Fies underwent a major expansion under the PT governments, but with out-of-control spending. In addition, since 2017, more than half of the beneficiaries are in arrears with their financing payments.

Still in 2015, during the Dilma Rousseff (PT) government, the program began to be streamlined. What was deepened with Michel Temer (MDB) and Jair Bolsonaro (PL).

In Fies, the government pays student fees at private higher education institutions. Student debt lingers after graduation.

“It’s no use telling me that Fies was costing R$5 billion, that I already had a debt of R$5 billion, no problem,” he said. “Oh, but [o estudante] Will you give up, won’t you pay? It’s very little for us to think he won’t pay, he didn’t even have a chance to prove he’s going to pay, he didn’t get a job.”

Lula spoke at a meeting with deans of federal institutions of higher education this Thursday (19) morning. The meeting was attended by around one hundred deans of universities and federal institutes of education. Ministers Rui Costa (Casa Civil), Márcio Macedo (General Secretariat of the Presidency), Camilo Santana (Education) and Luciana Santos (Science, Technology and Innovation) also participated.

The meeting was closed, but Lula’s speech was broadcast on TV Brasil.

In his speech, Lula suggested that he will not be bothered with student debt as long as there is tolerance for debtors who are rich. “But if we have so much tolerance for the rich who owe in this country, why don’t we have the understanding that a young man who graduated can pay his debt? Brazil has almost 2 trillion [de reais] of debts that people don’t pay, people who don’t pay income tax.”

The president pointed out that, before PT governments, financing already existed, but young people without a guarantor could not gain access. It was from 2010 onwards that the government began to relax the program’s rules, with initiatives such as the end of the guarantor obligation and interest rates below inflation —which meant a federal subsidy for beneficiaries.

“It was a fight here when we decided that the Brazilian State is going to finance it”, he told the rectors, recalling that not everyone was in favor of the Fies. “Our disposition is to do that again, not only to increase the quantity, but also to increase the quality.”

The absence of studies on default in the formulation of the program and monitoring of these indicators was one of the shortcomings pointed out by the TCU (Federal Audit Court) in 2017.

Of the 2.6 million active Fies contracts formalized up to 2017, more than 2 million have a debtor balance – of R$ 87.2 billion. Of these, more than one million students are in default, that is, more than 90 days late in payment. This represents a 51.7% default rate and R$9 billion in unpaid installments.

Last year, the Bolsonaro government launched a program to renegotiate debts. It also sanctioned a law that forgave part of the debts.

At its peak, Fies reached 732,000 new contracts in just one year, this in 2014. In addition to enormous ease of rules for accessing the program, it was the private institutions themselves who decided who would enter the financing —President Dilma herself said that this was a mistake by your government.

Thus, Fies represented high profits for companies: with guaranteed federal transfers, private colleges began to increase tuition and already enrolled students, who paid tuition, were included in the program.

In 2015, to contain spending, which reached BRL 13.7 billion that year, the government promoted several changes. Access to contracts was restricted and commanded by the MEC, interest rates rose and the portfolio began to demand a minimum score on the Enem. The beneficiaries’ income control was also changed — until 2014, practically anyone could have the financing.