As Rupee Plunges to Record Low, Dreams of Studying in the US Seem Distant for Indian Students


Aarushi Jain
Updated on Jul 18, 2022 12:40 PM IST

As the rupee continues to hit new all-time lows each day, study abroad hopefuls in India fear their dream of attending a US university is slipping further away, forcing them to fork out more money or choose a destination that is relatively cheaper.

Inflation, Falling Rupee Spell Trouble for Indian Students Planning to Study in the US

Latest Update (July 18, 2022)-The rupee has touched the 80 mark versus the US dollar, setting a new record low. The considerable rise in burden caused by the rupee's declining value may be seen by comparing historical data.

An Indian student who might have paid fees in 2017 at an exchange rate of about 65 rupees to the dollar may now have to spend 77 to 80 rupees.

In accordance with official statistics, more than 13.24 lakh Indian students pursued higher education overseas, with the majority of them migrating to the United States (4.65 lakh), backed by Canada (1.83 lakh), the United Arab Emirates (1.64 lakh), and Australia (1.09 lakh), and many others.

Study abroad counsellors suggest students should not worry as much, especially those who intend to get a post-study work permit in the US after completion of their studies. Although financial institutions say the worries are valid and the need for more education loans will increase.

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A declining rupee, in the opinion of Arijit Sanyal, MD and CEO of HDFC Credila, will raise the overall cost of education for an Indian student planning to study in the USA.

Lenders who offer education loans will see larger ticket sizes as a result. A borrower would require additional funds to meet overriding overheads such as tuition fees and supplementary costs. In contrast, Mr Sanyal noted that for borrowers who are repaying their loans at this time, it might be easier to deploy funds if their earnings are in dollars.

The two primary costs associated with studying abroad for students are tuition and living expenses. As a result of the rupee's depreciation, tuition fees and living expenses have increased because one dollar now costs more in rupees than it did before.

Prashant A. Bhonsle, the founder of Kuhoo Fintech, an online platform for student loans, said, for students who intend to study in the USA, the costs are significantly higher because they now have to pay tuition fees and living expenses in dollars.

Contrarily, the Euro and Pound have surged against the rupee, which has resulted in a decreased price of education for Indian students studying either in Europe or in the United Kingdom.

Bhonsle said it is great news for Indian graduates who had begun working and earning dollars. They could refund the money to settle their loans or for any expenses in India.

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As per, Avinash Kumar, founder of stated that every time the rupee depreciates, the costs of studying abroad for Indian students increase exponentially.

The rupee hit 79.99 to the US dollar as of its most recent decline. As a result, in January 2022, when 1 USD equals 73.8 INR, a student who previously paid a one-semester cost of USD 40,000 will now have to pay INR 31.92 lakh. According to him, the total cost for one semester is INR 41 lakh, which includes living expenses of about USD 9000 (INR 7,18,000) every semester and travel costs of INR 90,000 to INR 1,00,000.

Although the rupee plunges to a record low, study abroad experts say that choosing to study abroad is a thought-through decision that is unlikely to change soon.

Looking for Part Time Jobs in USA for Indian Students?

Source: NDTV

With the Indian rupee continually sinking against the US dollar, studying abroad has grown more expensive. Students,studying in the United Statesor wanting to enrol in an American university, face a double whammy of declining rupee value and record inflation in the United States.As a result, for thousands of aspiring students, the ambition of studying in the United States has become a faraway one.

However, for those who are already there, subsistence is a major concern due to rising energy and commodity prices.Parents who have been paying for their children's international education out of their own pockets may face a larger outlay as the Indian rupee continues to fall against the US dollar.

Also Read:New Graduate Route Attracted More Indian Students to UK: Report

The Impact of Falling Rupee Against US Dollar

As you have noticed, there has been a steep and continuous depreciation of the rupee against the US dollar for the past one year. USD 1 was worth INR 73.12 on June 14, 2021, however it is now worth INR 79.27 as of July 6, 2022.

In just one year, the Indian rupee has dropped by about more than 6% against the US dollar. That is, for every INR 1 lakh, you will now need to pay an additional INR 6,575 or more than last year to support your US education.

Even if there is no increase in tuition, the cost of education (including boarding and housing) will rise in rupee terms as the currency falls.

Let us understand this with the help of an example - if the tuition fee for a course at a US university is USD 10,000 per year, the rupee equivalent is INR 7 lakh while the value of USD 1 is INR 70. If the rupee falls to INR 75 per USD 1, the same tuition charge will be INR 7.5 lakh in rupee terms. It will rise to INR 7.8 lakh if the rupee falls further to INR 77 against the US dollar.

The rupee's depreciation increases financial liabilities for international students. When the value of the rupee falls, the rupee amount necessary to pay in dollars rises. This translates to higher schooling and living expenses, as well as a decrease in the value of the corpus set up for abroad study by applicants and their family members since loans are obtained to cover the initial necessities.

While top-up loans and refinancing alternatives are great options. However, the repayment terms of such loans are not suitable for everyone; also, one may be asked to pledge collateral to acquire this loan.

Rising Cost of US Education

According to recent reports, annual inflation in higher education in the United States was 8%, much exceeding annual retail inflation. This indicates that college costs have been rising substantially faster than overall inflation.

Even after correcting for inflation, college tuition fees increased year after year. According to the National Center for Education Statistics, the average tuition for a four-year degree program at a private nonprofit university increased from USD 31,700 in 2010-11 to USD 37,600 in 2020-21 when both prices were held constant at the 2020-21 price level.

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If you want to study at an Ivy League college in the United States, you will have to pay more magnific tuition fees and deal with annual inflation. The entire cost of education for an undergraduate program at Harvard University has increased from USD 82,178 in 2021-22 to USD 84,413 in 2022-23.

According to an ET report, the yearly student budget or cost of attendance (the total expected annual cost for a student) at theMassachusetts Institute of Technology(MIT) has increased from USD 77,020 for the academic year 2021-22 to USD 79,850 for the academic year 2022-23.

Overall Costs Increased by 10%

According to the report, the depreciation of the Indian rupee, along with the regular annual growth in the total cost of education in the United States, has increased the total cost of education in the United States by roughly 10% for new students.

The flood of liquidity to combat the Covid-19 outbreak, together with the Russia-Ukraine war, drove up global inflation substantially. Retail inflation in the United States reached 8.6% in May 2022, the highest level in the last 40 years.

Inflation means that every rupee you own has less purchasing power, and it is directly related to the currency rate.

Furthermore, for Indian students already studying abroad, the current depreciation of the Indian rupee against the US dollar merely allows for crisis management. However, for those hoping to study abroad this year and beyond, the current status of the economy should help establish a corpus that includes tuition, travel expenses, and the cost of living, as well as currency rate swings that may need a revision of investment plans.

How to Manage Your Finances

The situation must have become difficult perhaps but it is still not an impossible dream yet to study in the US. As a study abroad aspirant, you must find alternative methods to minimize your costs and expenditure, like getting a scholarship or fellowships or earning some extra income to make ends meet to fuel your study abroad dream.

You can also upgrade or change your investments to cover the additional costs. Additionally, you can protect yourself from this economic fall or inflation by carefully evaluating economic situations and diligently planning.

Scholarships are a great way of cutting down your study abroad expenses especially the tuition costs. University scholarships, government-based scholarships, private organisations, and trusts all offer scholarships to students from diverse backgrounds.

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Another effective technique is to select the right bank for education loans to study abroad. Though most banks have made floating interest rates the default, when applying for an education loan, make a conscious choice to go with a floating interest rate.

A variable-rate loan will benefit from the RBI's rate modification, which is directly tied to inflation and other related factors. Foreign fund investments are also effective possibilities for getting currency-adjusted returns to offset the effects of rupee depreciation.

Want to Study in the USA With a Scholarship?

Source: The Economic Times

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