Those who have delayed paying their fees to US universities, may end up paying Rs 50,000 to Rs 1,00,00 more, as the Indian currency hits a 2-year low.
If the rising cost of education was not bad enough, the rupee hitting a two-year low against the US dollar will leave Indian students poorer by anywhere between Rs 50,000 and Rs 1,00,000, especially for those who have delayed paying their fees to foreign universities this July.
It is estimated that around 8-10 per cent of Indian students going to the US end up paying their fees late. 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, varying from institute to institute.
The Indian rupee weakened to a two-year low to touch Rs 48.23 per US dollar yesterday, and experts fear it will fall further. While most universities and institutes in the US begin the admission processes in July and August, foreign education consultants say students will have to pay more to institutes which start their admission process in September.
"On an average, Indian students have to pay fees of $12,000-20,000 per semester at US universities. With the rupee weakening against the US dollar, students will now have to pay Rs 30,000 to Rs 50,000 more as overall expenses will rise," says Dinesh Gehlot, assistant vice president, Credila Financial Services. An HDFC Ltd. company, Credila provides loans for students for overseas education.
Of about 130,000 students that go abroad for studies from India every year, about 100,000 go to the US, followed by Britain, Australia and South East Asia, among other countries. According to industry estimates, the quantum of currency that goes abroad is about Rs 1,800 crore.
"By this logic, per student expenditure is pegged at Rs 18 lakh a year. Most students deal with this based on loans and scholarships. At current rates, doing a simple mathematical valuation on the rate of rupee devaluation, the expenses will go up by about Rs 1,00,000. The best way to avoid this in the long term, suggest academics, is the introduction of forward contracts in the loan agreements which functions as an insurance," says Arup Datta, associate director, PricewaterhouseCoopers.
For a student going abroad for studies, the financial institutions pay the fees directly to universities as part of the former's education loan. "We also deposit certain amount every six months for the students’ living expenses while their pocket expenses are borne by them. The weakening of the rupee will impact payment of fees as well as living expenses which we will replenish for students seeking admissions now," says Gehlot.
According to overseas education consultants, even the Great Britain Pound (GBP) has appreciated against the Indian rupee, thereby impacting students seeking admissions in universities in the UK. "Since the rupee has weakened in September it is now too late for students to have second thoughts about going abroad. Instead, students will have to fight it out and pay an extra Rs 50,000 to Rs 1,00,000 for fees that average around Rs 13,00,000 to Rs 15,00,000," says Mansoor Amin, director of Chennai-based Linking Overseas, a foreign education consulting firm.
However, some say this is a short-term effect. "Most students tend to make payments of fees on a term basis. Hence, they will be able to deflect a major impact. Though, it will cost them more to buy foreign exchange and expenses will go up automatically. But minor fluctuations like these are a norm, and they will not have a major impact," says Anup Sinha, professor, economics department, IIM Calcutta (IIM-C). "Also, at the undergraduate level, students going abroad come from family backgrounds where this would make no impact at all," says Gautam Puri, managing director, Career Launcher