Why foreign studies dominated despite inflation, weak rupee?

A LocalCircle survey in July suggested that Indians do not see the impact of a depreciating rupee on foreign education plans as much as they see on other expenses. This reflects a trend that preceded the pandemic, when the number of students going abroad was increasing rapidly. The count doubled between 2016 and 2019 alone.

US remains attractive despite rupee depreciation. “The sentiment has not waned and as long as America continues to welcome students, I don’t see any major change,” said Sanjay Laul, chief executive officer of M Square Media, an international education platform.

However, lol see some changes from the US to the low cost countries. Since the end of February, the rupee has gained 6.1% against the British pound and 5% against the euro, while depreciating 5.7% against the dollar. Arijit Sanyal, MD and CEO, HDFC Credila, an education loan company, said, “The rupee depreciation may increase the cost of students going to the US, but not so for other study destinations with less adverse currency volatility.

American Dream

Besides the clout and swagger that others lack, there is more to American institutions that attract students despite the cost. In January, an InterStride survey found that students rated the prestige of American colleges and universities as the most important driver. “The US is home to all Ivy League colleges. The funding they receive and the culture of giving back also helps colleges reinvest in technology and infrastructure,” said Vibha Kaggi, CEO of reachIV.com, an education consultancy. “Plus, the payoff is huge, she said.

Amit Ganda, MD and CEO of Avanse Financial Services, education finance, said demand is driven by an aspiration to access quality higher education with upgrades in the quality of living abroad, and the US has a lot to offer on this front. strong. This is another reason why at a time when more Indian students are dreaming big, cost is not a major deterrent.

access to capital

For many, overseas study becomes possible largely because of improved access to education loans. Education loans sanctioned by State Bank of India for studies abroad grew by almost 35% between 2016-17 and 2018-19 3,431 crore, latest available data shows. The pandemic hit the education loan sector as students postponed their plans, but the huge demand currently in play after the pandemic put loans in the picture again.

“In the current year, we continue to see a strong growth in loan applications from students planning to study abroad, independent of the impact of the pandemic,” Sanyal said.

Most lenders usually cover tuition fees and other expenses such as the purchase of accommodation, travel and study equipment. They often factor in currency fluctuations when approving loans. Foreign lenders also offer dollar-denominated loans, said Rhinoceros, but “with interest rates hardening, dollar loans become expensive, and are usually not hedged, which adds to the risk”. , said the rhinoceros.

cover expenses

Despite inflation and depreciation of rupee, the high cost of education does not bother students going abroad because of its returns. A RedSeer analysis in 2021 showed that the salary one could earn after a degree in the US or UK could be almost 10 times the salary they would get if they studied in India. Science, technology, engineering and mathematics (STEM) fields, which remain strong focus areas for Indian students, also help end up with careers that are financially stable.

Kagzi said, “Even if the currency rate remains the same, upon graduation, when they repay these loans, they will return this fund at the increased dollar rate and the loan repayment will be much easier.” Will go.”

Meanwhile, to deal with higher expenses, students can take up on-campus or part-time jobs or other remote work options, suggest experts.

Overall, the cost will be high, but the return justifies the expense for those who are truly dreaming of an overseas degree.

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