Statistics by the Ministry of External Affairs reveal that over 11 lakh Indian students are studying abroad as of July 2021. The alarming data is indicative of the percentage of Indian students who dream of going abroad to pursue their higher education. However, no matter how life-altering it can be, studying on foreign soil can be financially draining.
Every year, on average, about 8 lakh Indians go abroad to pursue higher studies, but only a handful of them get their hands on the limited number of scholarships.
The rest opt for education loans to fulfil their aspirations.
Factors like differences in currency rates, repayment of loans, daily expenses (not covered under scholarships), to name some, often tend to skyrocket the budget. These roadblocks often cause hindrance for students who wish to fly abroad.
And to avoid unnecessary hiccups, let’s take a look at certain money points that every student must remember before flying abroad:
Know About Currency Spread
Several factors add to the shooting-up of the expenses, and one of them is forex rates. Even a slight change in currency rates can make a lot of difference to your budget. However, there are ways through which you can save big bucks if you play your cards right. For instance, banks charge a spread between the purchase and selling price of the foreign currency.
Banks and financial institutions lean towards selling the currency at higher figures than the existing one. The highest spreads are usually levied at airports, however, neobanks and FinTech platforms offer much lower forex rates.
Keep a Tab on Currency Rates: It is vital to keep a close eye on the fluctuating currency rates to save money on future exchanges. If monitored closely, you can leverage the same to your advantage. The dynamic rates vary among various banks, financial institutions, and money changers. You can lock in the best exchange rate when the numbers are comparatively lower so that you don’t have to worry about the fluctuations. While it may not seem like a lot of savings at first, you’ll gradually realize that you are actually saving a lot. Nowadays, apps and websites provide rate notification alerts about a drop in the value, which can help you make an informed decision. In fact, avoid purchasing the currency when the rates are high, and buy more when they are substantially lower.
Compare the Rates: Always check and compare rates and charges before going ahead with remittance or exchange. You must calculate the total cost of the deal and analyze the breakdown. The exchange rates vary from company to company, and sometimes they can be as high as 6%, depending upon the currency and place. Use online forex marketplaces to compare the margins from different vendors and banks. Since every vendor offers the best rate to gain business, you can leverage the
competition to get the best deal.
The key is to understand the overall cost and not just look at the currency rate. There are many hidden charges, and understanding what you are paying for will help you make a better decision. For instance, even if the vendor is offering a lower rate compared to others, there can still be some locked-up costs like a service fee, foreign transaction fee, and others. So, watch out for them. While it may sound like stating the obvious, chances of it skipping your mind, and as a result, you can lose a lot of money.
Save on Medical Bills with Insurance: Another unaffordable expense in foreign countries is healthcare. Unlike India, claiming healthcare services is not easy abroad and costs way more than expected. Hence, you have to plan it wisely. Medical expenses can make up for a huge financial liability; therefore, buying a student medical insurance plan is a great idea.
You can either buy insurance from an Indian company or a foreign insurer that has a tie-up with the university, but don’t forget to do extensive research before purchasing one. An ideal insurance plan must cover medical emergencies like dental treatment, accident, evacuation and repatriation, personal liability, tuition fee, travel, and sponsor protection.
While it is advisable to go for a domestic provider if you have a tight budget as the premium charged by Indian companies is lower,opting for an overthe-top foreign insurer will give a more comprehensive health cover.
Besides health, travel insurance is also a must. Always make sure that your travel insurance covers accidents, medical emergencies, loss of baggage, passport, and important documents.
Open a Local Bank Account: Opening a local bank account is one of the most effective and safest ways to manage your money. If the duration of your course is over a year, these bank accounts not only help you save on frequent conversion fees, but also help in getting your paychecks from part-time jobs quickly.
Several universities have tie-ups with banks, and therefore, it will be easier for you to open an account. Some of the documents that are needed include your passport with a student visa, a letter from the university confirming your admission and course details, your college ID proof, and local address proof, to name a few.
In a nutshell, managing finances in a foreign country can be challenging and overwhelming due to changing currency rates. But given the right understanding and in-depth insights, you can make sound decisions. In fact, you may as well end up saving some if you follow the above-mentioned pointers carefully!
This article was published in The Economic Times.