Dreams Of Studying Abroad Appear Farther Away As Rupee Plunges To Record Low

With the rupee touching its new all-time low every other day, study abroad aspirants in India fear their American university dream is getting farther as they will have to cough up more money or shift their choice of destination country where it is comparatively cheaper.

While financial institutions feel the concerns are genuine and the requirement for a higher amount of education loans will go up, study abroad consultants believe students have less to worry about, especially those who plan to work in the US post completion of their studies.

"As the rupee tumbles to a new record low against the US dollar, it ripples concerns far and wide among study abroad aspirants. The weakening of the Indian currency against the US dollar will deeply impact students' overseas education plans and add to the financial burden," Pushpender Kumar, who plans to study law in the United States, told PTI.

"For my other friends, a change in choice of a country can work, but for me, it cannot consider the long-term plans. Every country has a different legal system, requiring different knowledge to practice as a lawyer. I don't have the option. However, I feel the ultimate cost will further shoot up till I land there and ultimately graduate," he added.

This week, the rupee hit a fresh all-time low, touching the 80 mark against the US currency.

According to official statistics, over 13.24 lakh students from India went abroad for higher studies, with a maximum of them heading to the USA (4.65 lakh), followed by Canada (1.83 lakh), UAE (1.64 lakh) and Australia (1.09 lakh), among others.

Arijit Sanyal, MD and CEO, HDFC Credila, believes a depreciating rupee would indicate a rise in the cost of education for an Indian student aspiring to study overseas.

"From an education loan lender's perspective, this would result in larger ticket sizes. A borrower would need more to cover overarching expenses, including tuition fees and ancillary costs. However, a borrower at loan repayment stage during this time might find it easier to mobilise funds if they earn in dollars," Mr Sanyal said.

Tuition fees and living expenses constitute the two main components of students' expenses when studying abroad. The rupee facing a losing streak translates to increased fees and cost of living as a dollar would cost more in terms of rupee than earlier.

According to Prashant A Bhonsle, founder of Kuhoo Fintech, an online student loan platform, the costs are much higher for students planning to study in the USA as now they have to pay the tuition fees and living expenses in dollars. In contrast, the euro and GBP have appreciated against the rupee and, as a result, have reduced the cost of education for Indian students in the UK and Europe.

"It is good news for the Indian students who passed out and started working and earning dollars and sending the money back to India either to pay their loans or expenses in India," he said.

Historical data comparison can capture the significant increase in burden propelled by the rupee's dropping value. 

An Indian student, who paid a fee at an exchange rate of around 65 rupees per dollar in 2017, might now end up paying 77-80 rupees per dollar.

Avinash Kumar, Founder, Credenc.com, said the cost of everything, from tuition fees to living expenses to travel tickets, increases every time the rupee tumbles.

As per the most recent fall, the rupee touched 79.99 against the US dollar, so a student whose one-semester fee was $40,000 earlier paid Rs 29.52 lakh in Jan 2022 when 1 USD = 73.8 INR today has to pay Rs 31.92 lakh. With a living expenditure of around $9000 per semester (INR 7,18,000) and travel expenses (INR 90,000 to INR 1,00,000), you are looking at a whopping expenditure of Rs 41 lakh for one semester, he explained.

Study abroad consultants feel that studying abroad is a well-thought decision and is not likely to change quickly.

"Most students who are taking loans are taking according to the fees. So if the fees increase in rupee terms, the lenders consider it and increase the sanctioned amount. Students who had taken a loan 2-3 years back can pay it back easily with their earnings in dollars," Sumeet Jain, Co-founder, Yocket, a platform for study abroad aspirants.

Similarly, Saurabh Arora, Founder and CEO of University Living, global student accommodation managed marketplace, said students are still choosing to go abroad. It's just that they are choosing to go to new destinations where the tuition fees, the standard of living and the cost are a little cheaper, like France, Germany, Portugal, Italy, and Spain.

Vibha Kagzy, Founder and CEO of ReachIvy.com, believes that even after the pandemic, students' aspirations to study abroad have gotten bolder than ever, and it is unlikely that the exchange rates will dampen this.

"Changes in the global economy are the norm. The US has been a study abroad choice owing to ease of communication in English and an abundance of opportunities. European countries have also caught up and are at par. Arguably, their tuition is more attractive, as are their financial support options," she said.