Students have shifted from the public lenders to other lenders.
Education Loans
Indian rupee depreciation is impacting the aspirations of Indian students who are planning to study abroad. Today, on April 23, 2025, 1 USD equals INR 85.17; however, on March 10, 2025, 1 USD equals INR 87.36. This slight fluctuation would affect the funds requirement by INR 3-4 Lakhs for many students.
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For instance, the average annual expenses for tuition fees, living costs, and travel are around USD 25,000 to USD 45,000 in the US. This amount translates from INR 21.5 Lakhs to INR 39 Lakhs. However, if this amount is calculated based on the INR 85.17, then the amount translates to approximately INR 21.2 Lakhs to INR 38.3 Lakhs. Therefore, a fluctuation of around INR 3- 5 Lakhs can be seen because of this surge, straining the already stretched budgets of students.
These changes bring anxiety among the students, but are these changes worth the worries, or are they simply noises amplified due to a lack of knowledge? Well, these are concerns, but not on a broad level. Students can minimize its effect by taking the help of part-time jobs and scholarships. While bigger-ticket expenses become more manageable through education loans, fluctuations may raise the top-up request.
Is this currency trend shaping the way education loans are structured in 2025?
Students have shifted from the public lenders to other lenders. This shift was seen as these institutions offered unsecured loans at competitive interest rates with quicker processing fees, flexibility, and broader loan categories. For instance, the Credilla disbursement process takes around 10 days. These NBFCs and private banks also offer higher education loan amounts without the margin money (a percentage of the education has to be sponsored from their pocket). This helps them save that money for the currency fluctuations and inflation they might face during their studies.
With the changing global market dynamics, the Reserve Bank of India has also slashed the repo rates from 6.25% to 6%. This will reduce the interest rates; currently, the interest rates range between 10% to 14%. Refer to your education loan disbursement letter to know the interest rate. This also presents a valuable opportunity to negotiate better terms and explore floating or hybrid interest rate options that adapt to market trends.
How to Counteract Inflation and Currency Fluctuations?
Forex Cards
Forex cards lock the exchange rates, aiding students with the rate volatility during the transactions. They also save money on currency conversion and transactional charges.
Budgeting & Spending
Currency rates tend to change frequently. It's wise to keep a buffer to balance the shift and opt for affordable accommodations, prepare home-cooked meals, and take advantage of student discounts and campus facilities during the initial phase of settling in.
Local Bank Account
Store the money in the local bank account after converting the funds. This will help you manage the funds better and also benefit students while they do part-time jobs during their course.
Smart Repayment Options
Many students go for the full moratorium option; it is advisable to pay some amount during the moratorium period and avoid excessive interest accumulation.
Build an Emergency Fund
Store 2-3 months of the living expenses in the local account to ensure that you have a cushion against the sudden currency shocks or emergency issues.
Smart Investments
While you stay abroad, always stay smart with your finances. Investing in US-based ETFs or Indian mutual funds with global exposure can provide long-term protection against currency risks.
Does All This Planning Help?
Education is an investment, not a mere expense. Currency changes and inflation rates are frequent in the market. But these changes can be effectively managed through financial planning. Therefore, when you are planning for the future, consider all the ups and downs and outweigh the obstacles with your determination and smart planning.
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