AN unexpected regulatory change has taken the shine off Brazilian education companies in the new year, putting an end to a dizzying rally and raising questions about whether President Dilma Rousseff really has given up on interventionist policies.

    The shares of education companies have skyrocketed over the past three years, despite a sharp slowdown in Brazil’s economy and a 12 percent drop in the benchmark Bovespa index. Investors saw the companies as a safe bet, given repressed demand for higher education among Brazil’s growing middle class and the government’s commitment to student loans and grants.

    Two weeks ago, however, the government changed without warning the rules governing a college loan program known as Fies, which provides roughly half of the revenue of listed companies such as Kroton Educacional SA and Ser Educacional SA.

    One of the changes slowed government payments to the companies, and the other set a minimum standardized exam score for Fies eligibility.

    The shares in both companies plunged in response.

    (SD-Agencies)