Don't let falling rupee crash your dream of overseas study

A free falling rupee is likely to upset the calculations of many students preparing to pursue their higher studies abroad.

Usually concerned with entrance exams, admissions, Visa process and so on, these students will have to factor in the sharp depreciation of rupee against foreign currencies , especially the US dollar.

The weakening of the domestic currency is likely to inflate the cost of overseas education, and also the ticket size of study loans. On Wednesday, the rupee closed at a new low of 60.73 against the dollar, a fall of over 9% in the past one month. "It's too recent a development to have an immediate impact on education loans.

However, in the coming days, not only US-bound students , but those planning to study in Europe, Singapore and Australia, too, could be adversely affected," says Narender Singh, general manager , retail banking department, Central Bank of India. "Ticket sizes of loans we have sanctioned recently have increased to the extent of rupee depreciation," informs Prashant Bhonsle, country director, Credila Financial Services, a subsidiary of HDFC.

Rough estimates suggest that the average ticket size has swollen by 10%. "Most people make the mistake of calculating the rupee impact on the total fees payable . However, the fact is that the funds are released on a per-semester basis. Therefore, the current state of the rupee will affect only the first tranche of the loan now; whether the costs for students will go further up or down entirely depends on the future rupee-dollar movement," explains Bhonsle.

There is very little one can do about the currency exchange rate movements . So, it would be wise to focus on measures that will help reduce your overall expenses, including the loan requirement.

"Students should first introspect on the real reason for studying abroad. They should also understand the employment rules, and be very sure about the universities that they apply to. They should save intelligently, consider other options of study, be prepared with all sources of funds and a back-up ," says Swati Salunkhe, managing director with education counselling firm Growth Centre India.

If you have relatives living in the US, they can come to your aid as family sponsors, bringing down your education loan amount. Besides, this arrangement will also eliminate the risk of currency fluctuations , as your relatives do not need to go for currency conversion . Moreover, given that state-run banks have a cap of Rs 20-30 lakh for overseas education loans, you may have to give this alternative a serious thought.