With the rupee sliding to a lifetime low against the dollar, students studying overseas, especially in universities in the US, individuals planning to travel abroad, or those planning to buy imported items will be affected. However, non-resident Indians repatriating money home will gain from the depreciating currency.
Foreign education
The cost of tuition, living expenses and other fees denominated in dollar will go up. Parents who fund their children’s education from their savings will see a higher outgo. Persons who have taken bank loans to fund their foreign education will feel the pinch more as the rupee amount required to pay in dollars will increase. Moreover, students will have to shell out more for examinations such as TOEFL, GRE and GMAT.
For instance, if a US university charges $40,000 per year, the cost in rupees used to be Rs 32 lakh when the exchange rate was 80. However, with the rupee depreciating to 86 a dollar, the same tuition will now cost Rs 34.4 lakh.
This increase translates into a higher loan requirement and parents have to borrow more. Those facing a shortfall in funds due to currency fluctuations may have to go for a top-up education loan. Though top-up loans will add to the interest burden, it will help students continue with their studies.
Chaitali Dutta, founder, AZUKE Personal Finance Advisory, says the spring semester fees of students in the US universities are due in January. The recent spike in the dollar rate will affect India-based parents and students. “This depreciation in the rupee will see this semester cost going up from the fall semester by between Rs 60,000 and Rs 1,20,000, depending on whether the university is public, private or ivy league.”
Ideally, experts say students should negotiate with the university management to pay a part of the fees before commencement of the semester and the rest when the exchange rate stabilises. Borrowers having a good credit score must negotiate with the bank for a lower interest rate. Moreover, after students start earning, they should take a proactive approach and close the loan before its time to reduce the overall interest burden.
Travelling abroad
For travellers who have already booked a tour abroad and have paid in rupee will not be impacted as the travel company had already done rate finalisations on a forward basis.
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