SAO PAULO, Oct 14 (Reuters) - College tuition delinquencies in Brazil surged during the first half, reflecting the impact of the steepest economic recession in 25 years, rising borrowing costs and reduced public spending.
Tuition defaults soared 22.4 percent between January and June, compared with a 0.9 percent decline in the same period a year earlier, credit research firm Serasa Experian said on Wednesday. Delinquencies among primary and secondary school students climbed 25.9 percent in the same period, Serasa said in a study.
According to Serasa, the increase in tuition defaults “was due to the rather adverse economic outlook for debtors, with inflation, interest and unemployment rates considerably higher than a year ago.”
Brazil’s economy, the largest in Latin America, shrank over the past couple of quarters and is slated to contract this year and next, the first back-to-back annual contraction since the 1930s. Households across the country are grappling with accelerating inflation and large job losses, testing the ability of consumers to stay current on their financial obligations.
In addition, the government decided to reduce college fee subsidies as part of President Dilma Rousseff’s effort to cut the nation’s swelling budget deficit.
Shares in Kroton Educacional SA, the nation’s largest for-profit education firm, shed 0.1 percent on Wednesday. (Reporting by Guillermo Parra-Bernal; Editing by Andrew Hay)