With the fall in the value of rupee against the dollar, many students are facing financial difficulties since it is affecting their financial stability. Those students who have just recently got their loan sanctioned and also for those whose loans are being processed, the banks have come forward to top up their loans in order to bridge the gap between the rupee and dollar.
Although this seems to be a much required step that banks have pursued, nothing comes for free. A top up loan provided by the bank will be added to the total cost of your loan wherein you will have to pay higher EMIs and bear the extended tenor of the loan.
Increase in the cost of education abroad:
Previously, for a student who wished to study in the United States for a year, had to shell out $25,000 and $60000 for financing their cost of education, living expenses etc for an undergraduate course, whereas, for a postgraduate course like an MBA, financial requirements were somewhere between Rs 13-Rs32 lakh per year. Lenders generally provided an average of Rs14 lakh as loans which can even go up to Rs 20 lakh depending upon the students’ requirements. But with the 17% decline in the value of rupee in comparison with the dollar in the last five months have made it difficult for parents to finance their children’s education abroad who have to bear high costs if the value of rupee remained at this level for the entire tenor for which the loan was taken for initially.
Who stays happy?
Those students, who have managed to get hold of a job in the United States, will be the ones who will be smiling hard since they need to shell out only a few dollars to repay the loan amount in Indian Rupees back home in India. For such prospective job market candidates there is something they can smile about in this dwindling rupee scenario. And for those students who have managed to finance their course fees either by funding from their own sources or by taking a loan, this change in the exchange rate will not create an impact on their repayments since; the repayments in the form of Rupee will be through contracted Equated Monthly Installments (EMI) process.
What to expect:
The situation is likely to remain consistent at least for the next quarter. Most market analysts say that the fall in the rupee value to this extent is not the end, it is just the beginning. If Reserve Bank of India (RBI) does not come forward and deal with the issue immediately, then it can lead to a lot of unhappy faces especially for those who want to make a career abroad. Those who are willing to study abroad should expect to roll their sleeves in order to brace for rough times ahead since the situation is likely to worsen.
Students who have already got their loan sanctioned, will receive top ups from their bank which will only entail in higher EMI payouts and extension in the loan tenor. The new applicants however, will have to chip in collaterals higher in value or provide loan guarantors or co applicants who have a good net worth. However, what should be understood that, these solutions provided by banks are not general solutions. They are not one size fits all plan and personal attention needs to be given in each case. Therefore depending on the customer’s financial record, educational record, the college/university they are applying in etc, the banks will be able to arrive at a solution. Apart from these solutions, students can look up to various scholarships and merit programs that are undertaken each year here and even in abroad in order to help students with a good academic record to realize their dreams.