Plunging currency, falling aspirations
Indian students paying their fees in dollars for studying abroad are facing problems arranging for extra funds because of the rupee crisis.education Updated: Sep 11, 2013 16:19 IST
For Srishti Chauhan, who is all set to join the London School of Economics for an MSc in economics, the major reason for choosing the institution for higher studies is its excellence in scholarly research. She selected the United Kingdom because of the striking legacy of academic merit and a history of illustrious alumni of institutions there.
The falling value of the rupee versus the dollar (and the pound) has come as a setback to her just before she leaves for the UK.
A big blow
“The plunging rupee is a great blow to my plans for studying abroad. The value of the rupee with respect to the dollar and the pound has depreciated at an alarming rate and the accompanying volatility increases the uncertainty over the right time to pay the tuition and accommodation fee. My expenses have already risen by `6 lakh approximately, since when I started my application process the pound was selling for `81 and now it’s close to `107. Because the pound is appreciating against the dollar as well, the value of my TOEFL scholarship (which is in USD) is decreasing as well,” says Chauhan.
Those who are already studying in universities abroad are also being affected. “From the perspective of a student in the UK, what has compounded the problem is the fact that the near 15% depreciation in the rupee against the dollar has been accompanied by a 5% depreciation in the dollar against the pound, resulting in a higher depreciation of the rupee against the pound (of about 17%), since July. Given the fact that last year the rupee was relatively stable and with the finance minister claiming that this time around the rupee has overshot its fundamental value, I doubt if many prospective students had a hedge against this,” says Akshay Kohli, who is pursuing a master’s programme in economics at the University of Cambridge, UK.
Kohli, however, is relieved by the fact that his university allows students to pay the tuition and residential fee in three installments. “I can hope for a correction in the exchange rate, by the time I make my subsequent payments. However, I have had to pay the first amount at the prevailing rates, which definitely hurts. In my case at least, the tuition and residential fee was 80% of the total, and the remaining 17% to 18% was on living expenses and other miscellaneous costs,” he adds.
It’s tough for students in the US, too
Students going to the US share a similar sentiment. “There are many costs when applying abroad. As far as the US is concerned, there is an application fee at some colleges. Students need to pay for the SAT/TOEFL/GRE and need to pay to send their scores to colleges as well. Once students receive the college decisions, they need to pay a commitment fees to the college of their choice. The falling rupee is making this entire process more expensive for an Indian family,” says Aliza Noor Khan, who joins the University of Southern California this year.
The additional costs may not make much of a difference to students already studying in the US, but they feel it will affect the new lot.
Says Rhea Munjal, a student of Ohio State University, “The costs for applying to the universities are still the same, which comes to approximately $100 for an application form, about $130 for TOEFL and $30 for sending application forms through FedEx but as the dollar rate has increased, the price has gone up by 20% for Indian students applying to an American university.”
The plunge of the rupee has been very rapid. By the time most people realised how much it had depreciated, there was little they could do to guard against the fallout. “My friend was lucky to get her visa quickly and she paid her fee at a time when the pound was selling for `94. Unfortunately, I will have to buy the pound at about `109,” adds Chauhan.
What experts say
“It is an external, uncontrollable factor which may result in students delaying or even abandoning their aspirations to study abroad altogether. Depreciating value of the rupee is a disturbing trend for dreams of many students. However, long-term payoff of the studying abroad experience is still expected to outweigh these short-term external fluctuations,” says Rahul Choudaha, director of research and strategic development at World Education Services — a New-York based non-profit specialising in international education.
A grim scenario
According to a recent assessment by Assocham, the highest body of the chambers of commerce of India, Indian students who are going abroad for their higher education will see a high expenditure due to falling rupee on their food, living expenses and stay cost.
Indian students paying fees in US currency will have to arrange for more rupee funds for the same amount of dollar fees. Since March 2012, the rupee has weakened by more than 15%.
An estimate shows that tuition fee in the US ranges from $20,000 to $30,000 for undergraduates and from $30,000 to $40,000 for MBAs. With the rupee weakening against the US dollar, students will now have to pay `2 lakh to `4 lakh more as overall expenses will rise.
Students planning for next year’s admission will also have to pay more for TOEFL, GRE and GMAT application forms, apart from the admission forms of foreign universities that range anywhere between $50 and $500.
Education loans are usually in rupees, but as students pay their expenses in a foreign currency, the cost of education will also increase by 15% to 20%. For $100,000, a student had to pay `45 lakh. Now, they have to shell out `55 lakh to `58 lakh, depending on the exchange rate. “As the rupee continues to weaken, I imagine that when students are faced with the option of attending a prestigious college with no financial aid versus a lesser known college with significant funding, students will end up choosing the latter,” says Kimberly Wright Dixit, a Mumbai-based foreign education consultant. Nearly six to eight lakh students go abroad for studies from India every year and, according to Assocham estimates, the quantum of currency that goes abroad is around `1,00,000 crore.
Why the costs have gone up
* Since March 2012, the rupee has weakened by more than 15%, reflecting the higher cost that students have to pay now compared to last year
* An estimate shows that a fee of studying in the US ranges from $20,000 to $30,000 for undergraduates and from $30,000 to $40,000 for MBAs
* With the rupee weakening against the US dollar, students will now have to pay `2 lakh to `4 lakh more as overall expenses will rise
* Students planning for next year’s admission will also have to pay more for TOEFL, GRE and GMAT application forms, apart from the admission forms of foreign universities that range anywhere between $50 and $500
* The cost of education will also increase by 15% to 20%