The Indian Economy has forever been struggling to keep up the value of the rupee at a respectable rate. Ups & downs have come & gone, but this September, the country saw the sharpest slump in the rupee, as it touched a low of 72.97 per US dollar & closed there. Only a year ago, the scenario for our national currency was much better – a USD equalled INR 64.14. This 13.7% decline in value of rupee, over a matter of around 365 days, had an almost immediate effect on day-to-day life. This, coupled with factors like increased taxes & hiked crude prices led to petrol & diesel rates soaring to new heights. Indians are now worrying about effects like inflation, higher interest rates or reduction in foreign travel etc. that may soon follow. But amidst this uproar against raised fuel prices, what most of us are overlooking is the impact that all of this will have on education, specifically on the Indian students vying to study abroad.
In 2017, the academic fee was at an exchange rate of INR 65 per USD. Now the same will cost an exchange rate of Rs 71 per USD. There are approximately 210,000 Indian students in the USA who spend around USD 40,000 to USD 70,000 annually on education, housing etc. If an average of USD 50,000 is taken as the annual expenditure, the student will now have to pay an extra of INR 300,000 a year, just to afford necessities.
Many may quit the dream
Approximately, 752,000 Indian students apply to study abroad every year. Apart from this, many back home aspire to take the plunge – many aided through scholarships, but most of them funded by student loans and the likes. This sudden depreciation in the value of the rupee may force many to back out. Parents may withdraw, keeping in mind the forecast of inflation or a further decline in the value of the rupee.
Entrance tests fee to sore
To study abroad, an average student appears for tests like GRE, IELTS, GMAT, TOEFL etc. Not all students clear these exams on the first attempt. Taking these exams multiple times is a common occurrence. With the decrease in the value of rupees, the fees for these exams will increase manifold, discouraging many to attempt them again in case of failure.
Most educational loans release funds on a semester basis & not at once at the beginning of the course. Students who’ve taken a loan a year back will have to pay higher interest rates now because the value of rupee then impacted only the first tranche. Ticket size of loans may increase leading to a further rise in the balance payment to the bank.
Ways to combat the crisis:
Leverage Feeder Funds
Experts believe that inflation hits India harder than most countries on the globe. So if a student has been nurturing a plan to study abroad, she or he may consider investing in feeder funds. Feeder funds function in an international domain & returns can be in USD.
Weighing the pros & cons
A student must consider the real reason for wanting to study at a foreign university. If an institute of similar stature & facilities are available in India then going abroad might turn out to be an underwhelming yet expensive exercise. Also, if a student has got through an average institution abroad, taking a bank loan for that might just be a bad idea.
Make relatives living abroad useful
For those who have relatives in the same country as the coveted academic institution, may consider borrowing funds from them. Currency fluctuations will not affect repayment of such a loan.
Daily expenditures can also be met through working during off-days or on free time. This income might prove useful in taking care of necessary expenses like food, entertainment etc. & reduce the burden on parents.
The RBI said that expenditure for studying abroad has increased in the last couple of years – a 5% rise to be precise. Thus the situation can’t be ignored anymore. The students & the families need turn visionary and prepare for the times to come.