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How a falling rupee affects study abroad plans



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A strong dollar and weak rupee poses significant challenges for the 1.3 lakh Indian students who will go abroad this year. Fortunately, solutions are available.

A depreciating rupee has wreaked havoc on many students’ plans to study abroad. Within the past 10 months alone, the rupee’s exchange rate has fallen 8.7% – which means that students who have been relying on rupee-denominated loans or savings may now have a financial shortfall when it comes time to pay their tuition bills. The challenge is further compounded by high inflation and rising interest rates worldwide. The Reserve Bank of India (RBI) has already raised interest rates substantially, and is expected to continue doing so over the next several months or years. This means that Indian students (and their parents) who have entered into variable-rate loans may see their payments rising substantially.

Fortunately, students have many solutions to these last-minute financial concerns. These are challenges that we at MPOWER Financing see all the time: students choose a rupee-denominated loan for their education, but currency depreciation affects what they can afford overseas – perhaps during their final semester, their final year, or for longer. Furthermore, rising cost of living in the U.S. means that students may have underestimated the full cost of their education. Students who relied on an India-based lender are therefore increasingly turning to lenders like MPOWER to provide U.S. dollar funding for either a portion or the entirety of their education.

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The first recommended solution for students experiencing a last-minute financial shortfall is to leverage U.S. dollar loans, which are particularly valuable amid a falling rupee. 80 rupees to a dollar means that many students and their parents are rushing to seek additional loans or top-up funding so that students don’t have to defer their education. With U.S. dollar funds secured, students can enjoy the certainty that they will have the funds available to them when they need to be drawn upon – regardless of the future value of the rupee.

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Second, in today’s rising rate environment, students should consider a fixed-rate loan. Fixed-rate loans have interest rates that are fixed (pre-determined) for the loan’s entire tenure. These loans have a constant EMI (monthly instalment), and students can be confident their payments will never increase over time – regardless of what happens with market interest rates. Fixed-rate loans provide predictable payments and enable stronger financial planning.

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Third, students should find a lender offering no-collateral, no-cosigner options. The primary advantage of such loans is obvious: a family home is not on the line, and the student’s parents are not liable to repay the loan. But in addition to these benefits, processing times are often considerably faster for no-collateral, no-cosigner loans because there is no need to evaluate another individual’s credit or appraise a family home. Students can complete an application and receive a conditional offer for a no-collateral, no-cosigner loan through a lender like MPOWER Financing in only 20 minutes – even on their smartphone in the dead of night.

Fourth, students should not hesitate to ask their school for guidance. Foreign universities, especially in the United States, often present students with a long list of scholarships and trusted loan options – usually through web portals like IEFA.org, elmselect.com, or their university website. University recruitment officials speak frequently with their colleagues at the financial aid team and can share how previous students have funded their education.

Finally, students should remember that loans are only one option to finance their overseas education. Students should always pursue scholarships as their primary funding solution. Scholarship aggregators and portals such as internationalscholarships.com and eduPASS.org may provide targeted scholarship offerings for students based on their unique profiles and characteristics.

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Furthermore, many students pursue part-time or co-op employment in addition to loans to fund their studies. A combination of all sources of funding can help students ensure that they are making the best financial decision amid a challenging economic environment.

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Views expressed above are the author’s own.

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