BackDebt worries rise for students eyeing foreign schools
Debt worries rise for students eyeing foreign schools
PremiumAdded burden: Students at Princeton University. Studying in foreign universities has been a costly affair, but the rupee’s slump will make education more costly. Photo: Brendan McInerney/Mint
New Delhi: As the rupee’s slide continues unabated, Natasha Kumar knows she’ll need to take on a larger debt burden to achieve her dream of going to Singapore for her master’s degree.
Kumar, currently a B. Tech student at the privately run Amity University in Noida, will have to pay around ₹ 18 lakh for her course at Nanyang Technology University (NTU) in Singapore.
“I am suffering for non-academic reasons. Had I done the course a year earlier, I would have paid some 20% less than now," said Kumar.
Kumar, who has a 50% merit scholarship at Amity, said she won’t abandon the plan as NTU is a globally recognized institute.
“I cannot hold my plan for a year or so. Now I have no choice but to take more loans," she said. In April 2011, one Singapore dollar was around ₹ 36; now it’s more than ₹ 43.5.
The rupee, which touched a record low of 56.515 to the dollar in intra-day trade on Thursday, has depreciated by more than 23% against the US currency in the last one year. In May alone, the rupee has declined by around 6.51% on account of the uncertainty in global markets.
The rupee’s decline is especially nerve-wracking for those seeking a mid-career improvement in qualifications.
“The depreciating rupee is going to have a huge hole in our savings," said Maya Nair. Her son, who’s in the merchant navy, plans to get a master’s degree in a related field from City University London.
“My son is 37 and married, and perhaps wants to settle down with a more secure job than what he is doing now. A masters degree will help his career path," said Nair, a senior citizen in Delhi. “We are worried it’s going to have an impact on his plan."
Over 100,000 Indians go abroad every year to study. While the US continues to be the leading choice in this respect for Indians, Australia, the UK, Canada and Switzerland are some of the other key destinations. According to the US-based Institute of International Education, there were some 103,895 Indian students in the US in 2010-11, down 1% from the previous year. This number includes new and old enrolments. More than 27,000 Indian students went to Australia last year and some 12,000 to Canada, according to official statistics.
While aspirants are worried about the rupee decline, “we have not seen students dropping the plan if they have a good offer. The (decline) has happened quickly in the last three months or so. Hence, its impact will be seen in the next few months."
Costs vary across courses, with an international MBA about 25% more expensive than a regular master’s degree, he said.
The weaker rupee may make students more choosy, said Amit Agnihotri, who runs management education website MBAUniverse.com.
“It may not affect the Ivy Leagues because of their pedigree but it will certainly hamper tier-II foreign colleges that get the bulk of the Indian students," he said.
Conversely, Indian business schools that have foreign guest faculty will also be feeling the pain. “When the rupee depreciates, Indian business schools have to pay more," he said.
Some countries see opportunity in the currency fluctuation—Canada for instance.
“In Canada, the institutes are publicly funded (hence relatively less costly), the cost of living is cheaper and they can work while studying," said Simon Cridland, counsellor and head, advocacy programme, Canadian high commission in New Delhi.
Gupta of Jamboree said though that the Canadian dollar, too, has appreciated in the last five or six years, so the advantage may not be that decisive.
The rupee’s slump is forcing students to be more hardnosed about what to study and where, says Paroma Bhatt, who has got admission to the World Trade Institute in Switzerland for a master’s degree in international law and economics.
“Serious students are looking for courses which will give returns on investment. So, people are opting for less costly countries and for sure courses with a better shelf life," she said.
Opinion among officials at banks and other lenders is mixed about whether the rupee’s slide will lead to a drop in loans, as students forego plans to study abroad, or a rise in loans, as aspirants go forth regardless.
“If the rupee continues to trade above 52 to a dollar for the next few months, the demand for foreign study loans will start reducing," said a senior official with a Delhi-based public sector bank.
An executive at the country’s largest lender State Bank of India said loans may rise. “The admission season for foreign universities will start in a few months. Students will start applying for study loans from next month. Only then we will know if there is a dip in demand," he said. “But given the depreciating rupee, students may go in for higher loan amounts."
Prashant Bhonsle, country head, Credila Financial Services Pvt. Ltd, a unit of HDFC Ltd, said that with the “rupee depreciating, the loan application amounts have seen an increase. If students are getting into the university of their choice, they are going ahead with the enrolment even if their fees are seeing an increase because of the rupee’s movement".
On the other hand, students who aren’t getting into institutions of their choice may choose to wait for another year, he said.
prashant.n@livemint.com
Asit Ranjan Mishra contributed to this story.
This is the third in a five-part series on living with a weak rupee. Next: The luxury market
Also Read |Previous stories in this series
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