The depreciation of the Indian rupee acts as a hidden inflationary force for students aspiring to study abroad. Even if universities do not raise tuition fees, the weakening rupee increases the cost of education in INR terms, straining financial resources for students and their families.
The steady decline of the Indian rupee against the US dollar has escalated financial stress for students studying abroad. The rupee has depreciated by nearly 4% over the past six months, weakening from Rs 83.75 per USD in August 2024 to Rs 86.95 per USD as of February 18, 2025. At its lowest point on February 10, it had touched Rs 87.95 per USD before a partial recovery.
This depreciation has resulted in higher tuition fees, living costs, and everyday expenses for students overseas. Even a minor fluctuation can inflate annual expenses by several lakhs, making budgeting a significant challenge. According to Sudarshan Motwani, Founder and CEO of BookMyForex.com, “Rupee depreciation acts as hidden inflation for Indian students aspiring to study abroad, significantly increasing the cost of education.”
Hidden Inflation: The True Cost of Currency Depreciation
Even if universities maintain tuition fees in USD, Indian students end up paying more in INR terms. For example, an MBA at NYU Stern has witnessed a 3.53% annual increase in USD terms over the last four years. However, when adjusted for INR depreciation, the effective increase for Indian students is 6.79% per annum—almost double the inflation rate in INR terms.
Beyond tuition fees, students also experience higher costs for groceries, transportation, accommodation, and other daily necessities. Rahul Subramaniam, Co-Founder of Athena Education, notes, “The unpredictability of currency fluctuations makes it difficult for students and parents to budget for foreign education, increasing financial stress.”
The additional financial burden is particularly challenging for middle-class families. As Prashant Bhonsle, Founder and CEO of Kuhoo Edufintech, highlights, “A weakening rupee not only increases expenses but also raises the debt burden on students and their families.”
How Indian Students Can Minimise Rupee Depreciation Risks
1. Smart Forex Management
Students can mitigate rupee depreciation risks by adopting a structured approach to foreign exchange management. Sudarshan Motwani suggests a three-fold strategy:
- Forex Cards for Daily Expenses: Preloading forex cards at a fixed exchange rate can protect against future rupee depreciation.
- Wire Transfers for Tuition Fees: Direct transfers help avoid high currency conversion markups.
- Maintaining an Emergency Fund: Having a cash reserve in foreign currency can prevent last-minute financial shocks.
Opting for zero-markup forex services instead of traditional money changers or banks, which charge a 2%-8% markup, can further save costs.
2. Opening a Local Bank Account
Opening a local bank account in the destination country can provide financial stability. This enables students to receive payments, manage expenses efficiently, and avoid excessive forex conversion charges.
3. Hedging Against Currency Fluctuations
Parents and students can hedge against rupee depreciation using forward contracts, locking in favorable exchange rates to prevent losses.
Reducing Financial Burden While Studying Abroad
1. Cost-Cutting Measures
Students can cut discretionary expenses and explore budget-friendly options like shared accommodations, public transportation, and second-hand textbooks. Rahul Subramaniam advises, “Being mindful of spending habits can go a long way in managing finances abroad.”
2. Part-Time Jobs and Internships
Many countries allow international students to work part-time. Taking up part-time jobs, internships, or teaching assistant roles can help supplement income and reduce dependency on family funds.
3. Exploring Education Loans and Scholarships
A well-structured financial plan should include investments, education loans, and scholarships. Investing in USD-denominated assets such as passive US ETFs can act as a natural hedge against currency fluctuations. Alternatively, diversified equity mutual funds in India with strong long-term potential can help offset education inflation and rupee depreciation.
While education loans and scholarships provide financial support, experts caution against over-reliance. “Choosing lenders with lower interest rates and flexible repayment options is crucial to reducing financial strain,” says Prashant Bhonsle.
A Weaker Rupee: An Advantage for Graduates Working Abroad
Although rupee depreciation increases the cost of education, it can be beneficial for Indian students who secure jobs abroad. Earning in stronger currencies like USD, GBP, or EUR allows them to repay loans in INR, easing financial pressure.
“A weaker rupee actually works in favor of students working abroad, as their earnings in foreign currency make loan repayments more manageable,” notes Bhonsle.
While a depreciating rupee poses financial challenges for Indian students studying abroad, strategic financial planning can help mitigate its impact. By leveraging forex management techniques, cost-saving strategies, hedging options, and external financing, students can better navigate their international education journey with confidence.
