What Can Be Learned from the Brazilian Scholarship Cut?

Brazil’s Scientific Mobility Program (BSMP), the flagship scholarship program of the Brazilian government, is facing budget cuts next year [1] due to a lack of funds. This could have a large impact on U.S. institutions, which have become heavily reliant on the program to bring in international students. This mobility monitor discusses how the Brazilian economy influences student mobility at the national as well as the individual level, and suggests what institutions can do to prepare for the next economic fluctuations in their target market.

In 2010, Brazil’s GDP grew at its fastest pace in 24 years (7.6%) [2], and Brazilian President Dilma Rousseff announced the program [3] the following July. As of August 2014, the program had placed 27,710 grantees in the U.S [4]. with the majority of scholarship recipients at the undergraduate level. Fast-forward to 2015, Brazil’s economy has slipped into recession. The Brazilian government published its 2015 Q2 GDP in August, which showed that the economy had contracted by 1.9 percent [5] after a 0.7 percent decline in the first quarter of 2015, much worse than economists expected. In September, as a result of Brazil’s wayward economy, the Planalto Palace announced a budget cut for 2016’s scholarship program. The proposed budget is enough to maintain existing grants and fellowships but new scholarship application will be suspended.

Brazil's GDP Annual Growth Rate and US Dollar to Brazilian Real Currency Rate (2010-2015) [6]Although BSMP has funded thousands of Brazilian students to study at U.S. universities since its launch, a significant number use personal and family funds to sponsor their U.S. education. According to a recent WES survey of 151 Brazilian students, approximately one quarter of students from Brazil use grants or scholarships from external sources (government, NGO, employer, etc.) as their primary funding source. The majority (75%) of Brazilian students are still mainly funded by personal savings, family support and school financial aid.

While this sounds like good news for institutions with significant numbers of Brazilian students, in reality, the economic downturn will impact self-funded students as well. The value of the Brazilian Real (BRL) has fallen by half since 2011, which means that the cost of education rose for students and their families. A recent WES report [7] also revealed that many master’s students from Latin America have strong academic preparation, but lack the financial resources to study in more expensive programs. Nearly 70% of students from the region had an annual budget of $30,000 or less for their studies at a U.S. college or university. The economic downturn in Brazil will have consequences in terms of college affordability for both self-funded students and recipients of government scholarships. Students with fewer financial resources will be hit especially hard.

A slow recovery is expected to start gradually at the end of 2015 [8], and the reopening of the scholarship application is possible. However, it is always important to apply a strategic plan to your international recruitment, taking diversification into consideration when you invest time and effort into new markets. While the future of Brazilian student mobility is uncertain, good strategic planning will help institutions hedge against an uncertain future and help sustain a strong influx of international students.

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