Economy

Financing Brazilian private schools can be good business

The company emerged during the Covid pandemic offering a way to keep tuition payments on time

schools brazil
Sagrada Família, a Franciscan philosophy school in Belo Horizonte, which uses Educbank financing solutions. Photo courtesy of Educbank

Some six years ago, Danilo Costa abandoned his career in law and delved into the world of education. Coming from a family of teachers, he focused on setting up full-time primary and secondary schools aimed at Brazil’s low and middle-income households, eyeing up what he saw as a gap in the market.

Soon, he came up against one of the sector’s biggest challenges: debt. He noticed that families would repeatedly delay the payment of monthly tuition fees, leaving them with the challenge of settling their dues at the end of the year to re-enroll their child for the next semester.

Unlike other sectors, private schools in Brazil cannot stop providing tuition to students who are late on their payments. But inconsistent revenues have been driving educational institutions into the ground.

Brazilian families’ loyalty to private education is a cultural trait. “Spending on education is a priority for middle-class families, coming next to health and housing expenses. So the level of real default is very low. That’s why we felt offering an industry-specific working capital solution would be good business,” Mr. Costa tells The Brazilian Report.

In 2020, Mr. Costa came up with the idea for...

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