Slipping Indian Rupee against US and Canadian currencies makes NZ and Australia preferred study destinations!

There is a lot of talk on the slipping Indian Rupee against the US Dollar and its impact on the students wanting to study overseas. The reality is that the Indian Rupee is slipping against all major currencies though the depreciation against the US Dollar and Canadian Dollar is far rapid.

Interestingly this is an opportunity for NZ to emerge as the most economical of the major destinations. A student opting to study in NZ is likely to be least affected as the increment over the one year period is only 14% as compared to US where the increase is 20% and likely to be more in coming months. Australia too has already had its rapid increase between 2010 and 2011 and the increase in the last one year is only about 15%.

Hence, it is easy to summarize that on the cost parameters, NZ followed by Australia are likely to the the preferred destinations. Canada matches US in terms of increasing dollar value and the Great Britain Pound is not far behind. UK has other factors too which is working against its attractiveness as a destination for Indian students.

VALUE OF INR AGAINST OTHER CURRENCIES 2010-2011-2012

 INR VALUE AGAINST USD AUD NZD CAD GBP
2010 May 46 40 33 44 70
2011 May 46 48 37 46 74
2012 May 55 55 42 55 87
 INCREASE IN PERCENTAGE (May 2012 over May 2011)  20% 15% 14% 20% 18%

In these tough times, Indian banks too have not been of much help. The rate on education loans has been rising but more importantly the Indian banks have not really raised their upper limits for education loans in over a decade. Rs 20 lakhs used to be the maximum loan amount ten years ago and it continues to remain so. However the buying capacity of the Rs 20 lakhs has indeed gone down significantly. There is a need to urgently take lift the limit to Rs 30 or even 40 lakhs to be of real help to the students seeking overseas education. The salaries have increased in last decade and hence that increases the repayment capacity of the sponsors. Also the property values have increased too and it is possible to provide adequate collateral to the banks.

In an article in The Hindu of this week, the above is contended too… See link here.

I am quoted as saying…

“The US dollar has appreciated by 25 per cent in one year and this would mean that the education has become 25 per cent more expensive. Overall, there is 30 to 35 per cent increase in expense for an Indian parent in the last 12 months. What is worst is that the number of scholarships has come down too,”

Mr. Ravilochan says the maximum loan limit of Rs. 20 lakh was fixed by Indian banks a decade ago. There is a need to increase the maximum limit as the costs have become higher. In short term, this is the only solution that can be offered to the students and their parents.

Allow me to clarify that the reason why I say that the cost to an Indian student going to US has increased by 35% or more in last one year though the Rupee has depreciated by only about 25%(actually from the value that was in the beginning of 2011 compared to current value) is that most institutions too have increased their fees by about 5-10% in the last one year. In reality if we build the other cost increases and decreasing scholarships, the cost to the Indian student can even be higher.

Therefore, in summary, NZ and Australia are once again can be the ones to gain from the forex movements while Canada and US are the worst hit destinations. UK is affected in all ways this year and the forex changes too does not help.

11 Comments

  1. Sir, I follow all your posts quite religiously and admire the clarity in thought and unbiased blogging. I represent OutRemit, India’s first online way of sending money outside for overseas education.

    It is true that the INR is slipping, the education loans have gone up making overseas education more expensive and shifting the base from the traditional UK/US/Aus to newer destinations like NZ, Canada and Europe. I am slightly worried about the future of this industry and at the same time I also see the unwanted debris being cleared away bringing more clarity and transparency in the whole system.

    Would request you to throw some light on the way forward for this very scattered & unstructured industry.

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    1. Thanks. These are challenging times for the industry but more importantly should be seen as a time of change. The total number of fresh Indian students going overseas for studies has been hovering at around 100000 (US-35000/40000 visas per year, UK 20-25000 visas, Australia & NZ & Canada 10000 visas average each, Others 10000/15000) for a few years now. It has not really increased. The reason for this is not just the forex rate or limited education loans which has made quality overseas education more expensive but also recessionary trends in several of the destinations that have led to restricted post study work and settlement opportunities which have always been a key incentive to outbound students. Some of the target students have also chosen to study with the new private institutions in India who advertise heavily and sell a dream. Some have opted to take up jobs in the outsourcing industry. I do believe that in the immediate term, there is going to be really no change overall. However education like food and medicines will remain a demand for all and Indians generally give higher priority to education. I expect the outsourcing industry to decline with time and the private institutions in India are already earning a bad repute for themselves with poor placements and already are not able to fill their seats. IIPM and such are clearly degrees which are not recognized in India. Hence, quality overseas education will remain sought after, though the definition of quality is changing and changing rapidly. Media and Internet too has its influence and also has scope to inform and misinform.

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      1. I am usually a silent spectator of your blog since I deal in student remittances only. Couldn’t resist myself pitching in when you spoke about the foreign currencies. Hope this post doesn’t offend you, whatever limited knowledge I posses at this point of time comes after detailed interactions with students and consultants I have everyday.

        I have seen several consultants shut shops owing to restricted PSW regulations, while the smarter ones vagabond to newer territories overnight. I am amazed that such agents develop the skill sets to counsel students to a completely different environment of academics and lifestyle in such less time. This however may be restricted to the western India only, but I have seen very few consultants/agents/sub-agents talking about benefits to the student. Most of these people are bothered about how much money do they themselves make whether or not the student is taken for a ride.

        For example, this student I was speaking to said that his counselor has mentioned the last date of payment to his univ has passed and he would now have to wait for the next intake or choose another institute. So I call up this univ and checked with the authorities, they still had good 4 weeks to the last date of payment.

        If these incidents frequent sir, I would point out that private institutes you mentioned are not very different if minting money is the sole purpose.

        Also sir, I would request your permission to visit you during my next trip to Kolkata to discuss many such alarming incidents and how can we consolidate this industry to benefit the student-consultant community.

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        1. Every comment is welcome on the blog and this includes any aspects of the industry that one wants to raise. Your comments are welcome and you are welcome to touch-base if you visit Kolkata.

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  2. As long as Institutes in NZ or Australia don’t increase the tuition fee it will be good. The Australian Dollar too increased in the past few months

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  3. no self-respecting student will ever go to nz for their mickey mouse courses ( wine making, dairy tech, etc ), imao!

    and i must spread a word about the death trap called edu loan. students are immature and are easily got lured by the banks. but the innocent souls must understand that if you don’t get a job the bank will take away your house and you will have to spend the rest of your life in street with your parents – is that what you aspire for?! one must consider the worst case situation and must not put all eggs in one basket. and a foreign qualification won’t give you an edge over desi degrees. my friend’s ( a grad from an ivy called duke ) ctc was 40 lakh inr in usa. now she gets 14 thousand rupees per month in india. so, my dear students, think before you leap and care for your parents hard-earned money. my gre score was 1300+ and i was accepted in a top 100 ( us news and world report ranking ) national university of usa. i declined for the reasons i wrote above. education is a biggggg business in all developed countries except europe. that’s why tuition is capped at 500 euro there. and in some cases, absolutely free. living expenses are 300 ( small cities ) to 500 ( big cities ) euros per month. actually the problem with today’s youth is they’ve become very greedy. my friend rejected a job offer of 10 thousand rupees in bangalore and now preparing for gre. people have forgotten the age old maxim that a bird in hand is worth two in the sky.

    rabb rakha…

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    1. Your comments are a little too generalized. Each country has its own speciality amongst courses and programs. You have named a few of the strength areas for NZ and there are others too. They are by no means “mickey mouse courses” at all.

      Please also note that in Europe too most of the leading Universities have programs that are taught to international students and they do not have the same cap that you are talking of. These programs cost significantly higher and equatable with course costs in Uk and other countries.

      Not sure as to why your fried who studied at Duke in US is only able to get Rs 14K in India since this does sound low. Duke is a good University and I would feel that there are other aspects apart from the degree itself that appeal to the employers. Aptitude and Attitude for example…

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  4. “Please also note that in Europe too most of the leading Universities have programs that are taught to international students and they do not have the same cap that you are talking of. These programs cost significantly higher and equatable with course costs in Uk and other countries.”

    can you substantiate your claim?

    i believe i did my homework well! 😀

    http://www.internationale-studierende.de/en/prepare_your_studies/financing/tuition_fees/

    when i expressed my shock, my friend from duke said, the employers here only care for brand iit and iim.

    PS : remove my email-id ( it’s a bad blogging practice and didn’t expect from a veteran like you ) from your “ugc doesn’t recognise 1 year master degree from uk”-post. now i undertand why i am getting unsolicited emails occassionally which do not end up in the spam folder surprisingly.

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    1. Many of the European Universities have specific programs that are conducted in English Medium where there is an international fee. The local programs are not in English otherwise and aimed at local populance. I have not put your email at any place for any reason. I will still visit the particular blog that you mention and edit the same… “bad blogging practice” (uhhh)

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