Falling rupee dents foreign education

The rupee had slipped below the 82-level for the first time on Wednesday and that the falling rupee is spooking the financial plans of those wanting to pursue higher education abroad.

Hyderabad: The rupee plunged, yet again, this time by 37 paise, to close at an all-time low of 81.90 against the US dollar on Wednesday. During the day, it had slipped below the 82-level for the first time. The falling rupee is spooking the financial plans of those wanting to pursue higher education abroad.

For instance, the average tuition fee for a master’s programme in the United States of America (USA) is about $25,000 and the living expenses account for about $10,000 per annum. The programme, at the current Rs 81.9 rupee-dollar value, will cost Indian students about Rs.28.6 lakh. For the same course fee and living expenses, they paid about Rs.25.5 lakh September last, when the rupee-dollar value was pegged at Rs.73. In the year before that, when the dollar averaged Rs.69, Indian students pursuing a course with similar fee structure paid Rs.24.1 lakh. The expenses have increased by Rs.3.1 lakh in just one year and by about Rs.4.5 lakh because of exchange rate volatility, making international education more expensive.

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What will change?

Most students factor in the tuition fees, living expenses and travel tickets. However, depreciation of the rupee is not paid much heed. As a result of the difference in the exchange value, the students’ financial requirements increase and triggers the need for an additional loan or even a top-up loan, which come with associated processing fee and interest rates

Between September 2021 and September 2022, the rupee has depreciated by a massive 10 per cent against the dollar. As a result, EMIs might see 1-3 per cent impact, said Shivani Mani, Head of Student Financing Success at GradRight, an education finance startup that has operations in Hyderabad and other cities.

“Dollar against rupee is at its peak considering the last five years of data. Thousands of students get admits, plan and apply for their loans in March/April. The dollar then was priced at Rs.76. The same students are now asking for 7-8 per cent more money on an average. This is because they need more money to buy dollars for their tuition and living. Secondly, there is a mild fear that this trend might continue for the next few months,” she said.

“Additional interest burden is going to kick in after two years usually for many students. For every Rs.1 lakh they borrow now, they are going to pay Rs.40,000 in interest over time,” Mani added.

For most students and their parents, foreign education is a 5-7 years project, including 2 years of study. Most science, technology, engineering, and mathematics and MBA students pay off their loans within 3-5 years. This timeline may increase by a small margin. Within the context of ‘studying abroad’, some students may want to invite their parents there. Here, the reduced buying power of the Indian rupee is a significant factor, she said.

Worthy options

The Great Britain Pound has fallen by almost 13 per cent against the rupee in the last 12 months. Plus, there is a Graduate Route programme, which allows students to stay and work in the United Kingdom (UK) for 2 years after securing their degrees. These two factors have made the UK a favorable foreign education destination for Indian students.

In Canada, 1,75,000 study permit applications have been received between January and March 2022, that is 30 per cent higher than what happened pre-COVID in 2020. In Australia, between December 2021 and July 2022, about 2,60,000 student visa holders entered the country. Students are considering these countries as worthy options as these currencies are cheaper than the dollar. Also, these countries have a good reputation as academic destinations.

Ways to save

“Start preparing 18 months in advance to get the best student loan deals, flight ticket prices, and accommodation deals. Identify a university that is best for you irrespective of its ranking. Find a fixed-interest student loan to be immune to interest inflation. Consider dollar-denominated loans to save on forex conversion fees and unfavourable exchange rates while repaying the loan,” explained Mani.