Studying abroad is a costly affair. High inflation along with rupee devaluation make it further costly. So, without getting a scholarship, lack of proper and timely financial planning or failure to arrange finances, study abroad remains a hard-to-achieve distant dream for those belonging to not so wealthy families.
“With the recent fall in the Indian rupee value against the dollar currency, procuring educational loans would become more expensive, thus leaving a deeper impact on the tuition fees and the regular cost of living for students. Many of these students may encounter a last-minute financial shortfall when their rupees are no longer enough to cover the cost of American education – especially at a time of high inflation,” said Ashwini Kumar, VP and General Manager (India) of MPOWER Financing.
Kumar suggests the following steps to tackle the dual hurdle of inflation and rupee devaluation in absence of a proper financial planning:
Fixed Interest Rate Loans
To avoid unexpected setbacks, students seeking to study abroad in US-based institutions should explore fixed interest rate loans to cover the cost of their education. Students who take advantage of the fixed interest rate enjoy the certainty that their interest payments aren’t susceptible to market fluctuations and changes in the exchange rates. Thus, minimal risk is involved at the time of payment.
A variable-rate product may, in some instances, offer a lower interest rate, but during the life of the loan, it has a high probability to be higher than the fixed rate and at levels, which can make the fixed rate much lower than the variable one.
Another key factor students must consider pursuing their studies in the US, is to look at opting for US dollar-denominated loans. Students who take advantage of dollar-denominated loans enjoy the assurance that they will have the funds made available to them when they need to be drawn upon. They can also have peace of mind by not having to worry about exchange rates, and regardless of currency volatility or market turmoil, their funds are available when needed.
When students select a rupee-denominated loan for their education, it may result in currency depreciation affecting what they can afford overseas. So, it’s better for the students, who relied on an India-based lender, to get US dollar-based funding for the remainder of their education.
Students should bear in mind the option of availing scholarships while pursuing their education abroad. Numerous scholarship aggregators and portals offer targeted scholarships for students based on their profiles. These scholarships can cover their full tuition fee or part of their fee. By looking into all the above aspects students can ensure a sustainable and reasonable cost in pursuing their studies abroad.