Kroton Educacional : Material Fact

Publicly Held Company

Corporate Taxpayer ID (CNPJ/MF): 02.800.026/0001-40 Company Registry (NIRE): 31.300.025.187

"Company"), in view of the recent news reports published in the media provides the following clarifications:

Kroton is fully committed to complying with Brazil's educational laws and regulations and with the rules for student financial aid, and hereby clarifies that it is periodically subjected to audits by the Ministry of Education (MEC) in relation to the Student Financing Fund ("FIES").

With regard to the alleged difference in the school monthly tuition fees for FIES students and non-FIES students, the Company informs that its tuitions are exactly the same for both FIES and non-FIES students, in accordance with governing law (with the exception of the mandatory 5% discount on tuitions for FIES student enrollments as of 2015), and that its monthly tuition fees, including annual increases, comply with Federal Law 9.870/99 ("Educational Tuition Law").

A detailed analysis conducted by the Company of approximately 16,000 classes at Kroton's on-campus institutions confirmed the following:

• The monthly tuition fee applicable for students in a class are exactly the same regardless of whether they are a FIES or non-FIES student, with no distinction in tuition fees as a function of whether a student has contracted government student financing or not. This information is valid and applicable for all student classes in on-campus institutions, without exception (16,000 classes). Any differences in the net school monthly tuition fees (amount effectively owed by the student to the Institution) among students, when they do occur, are related to the individual eligibility conditions of certain scholarships and/or discounts, and not to the calculation of the tuitions (monthly tuition fee), which is set in accordance with the Educational Tuition Law. As such, the granting of scholarships and/or discounts is not related to whether a student has contracted FIES financing or not, but rather to whether they meet the eligibility conditions of a certain

  benefit. It is important to note that all scholarships and/or discounts to which FIES students are eligible are offered, made available and granted to FIES students, as determined by governing law.

• Analyzing, at the present moment, the Company's consolidated data for all students in undergraduate on-campus programs, the net school monthly tuition fee of FIES students is higher than that of non- FIES students. However, most of this difference occurs because of the mix of academic programs and starting semesters of FIES students. In other words, FIES students choose programs with higher tuition costs (e.g., Engineering and Healthcare programs), which logically means that the net monthly tuition fee of FIES students is higher. It is important to note that the rules for offering FIES established by the Ministry of Education (MEC) provide for a higher supply of seats in Healthcare and Engineering programs.

• Excluding this "mix effect," the difference in tuitions between FIES and non-FIES students is 8% of monthly tuition fees (base date 2016/1) and is fully justified by the eligibility or non-eligibility of students (FIES and non-FIES) for the scholarships and/or discounts practiced by the Company.

Therefore, on a comparable basis, the difference of 8% in the amount paid by FIES and non-FIES students occurs not because of a different pricing policy for these groups of students, but rather because of the individual application of the eligibility criteria for scholarships and/or discounts.

With regard to the increase in monthly tuition fees, the Company informs that this process is conducted once a year for all students, in accordance with the Educational Tuition Law. The annual increase is applied by class, with exactly the same rate of increase applied for all students in said class, regardless of whether they are FIES or non-FIES students. As part of its commitment to transparency, the Company discloses at its units the costs and information on which such annual increases are based and regularly submits this information to the audit department of the Ministry of Education.

With regard to the specific examples of the students cited in the news reports published on January 21 that reported different monthly tuition fees for FIES and non-FIES students, we emphasize that the classes in which these students were enrolled demonstrate that there are FIES students paying tuitions with and without discounts, as well as non-FIES students

paying tuitions with and without discounts, based on the individual eligibility of each student and rigorously in accordance with governing law.

With regard to the information that the Company charges additional fees above the amount financed by FIES for its medical program at its UNIDERP unit, Kroton clarifies that the monthly tuition fees of said program are in full compliance with the provisions of the Educational Tuition Law. Furthermore, the Company informs the following:

1. The monthly tuition fee for the medical program is exactly the same for both FIES and non-FIES students, with no additional fees charged for FIES students.

2. Both FIES and non-FIES students sign the same educational services agreement with the Institution, in which the amount of the program's semiannual tuition fee is clearly informed to the student;

3. In addition, FIES students also sign an agreement with the FIES financing agent for the financing of their monthly tuition fee ("SISFIES Agreement"), which cites the total amount of the program's tuition fee for the semester in alignment with the information on the aforementioned educational services agreement;

4. Both of the aforementioned agreements expressly establish, in a clear and objective manner, that any differences between the maximum limit financed by FIES and the total amount of the monthly tuition fee should be charged, by the Institution, directly from the student, as described below:

5. Kroton's educational services agreement states that "if FIES finances an amount that is less than the monthly tuition fee from the student as per amount informed in the preamble of said agreement, the service provider shall charge the difference in the monthly tuition fee directly from the student;" and

6. The SISFIES Agreement states in its fifth clause, sole paragraph: "Any difference arising from the financing rate established herein and the total amount of the tuition practiced by the Institution in connection with FIES financing shall be covered by the own funds of the student being financed."

7. SISFIES establishes a maximum limit on the amount financed by the National Education Development Fund (FNDE) for each semester (which is not to be confused with a limit on the tuition) which is not provided for in any rule issued by MEC. Such limitation, or system blocking, occurs only as from the first contract amendment of FIES students (i.e., upon the first contract renewal, which occurs semiannually), and does not exist during the contracting of financing by students (first academic semester of the students with financing);

8. On June 16, 2016, Kroton, seeking to demonstrate the existence of tuition limits at SISFIES and to clarify this fact to its students, made a request to a notary public to issue a notarial declaration in which it certified that it was only possible to enter in the SISFIES system the maximum amount of R$42,983.70 for the semiannual tuition fee of the medical program. The inclusion of any amounts greater than the aforementioned amount (R$42,983.70) generated a system block and a request to correct the amount in order to proceed with the contract renewal, even if the actual amount of the program's semiannual tuition fee was greater than this amount. The declaration was notarized by the official of the 22nd Notary Public of the City of São Paulo, SP, in Book 4412, pages 279/284;

9. Despite the contractual support regarding the lawfulness of charging the difference between the maximum limit financed by FIES and the total amount of the monthly tuition fee, the Company carried out, in the year of 2016, an electronic consultation to the FNDE regarding this matter (Process No. 2003146). In its response, the FNDE informed that "if there are any differences between the amounts of the semiannual tuition fee that surpass this limit, such amounts should be negotiated between the Institution and student." Therefore, the response from the FNDE only further affirms the clause provided for in the SISFIES Agreement and in the agreement between student and the Institution that supports the charge made by UNIDERP;

10. The charging of the difference between the maximum limit financed by FIES and the total amount of the monthly tuition fee already has been the subject of judicial questioning:

11. The Federal Court of the Federal District, in three different processes, ruled in favor of the charging of the difference directly from the student; and