Applying for financial aid, taking insurance cover and buying a forex card are among the most important things to do
Nineteen-year-old Namya Rawal is pursuing her four-year undergraduate program in the US. She will be in the second year of her college this August. At present, she is doing her internship in India. She hails from Delhi.
Last June, while was preparing to study abroad, she had some idea of the things to do before travelling abroad because her elder sister was already pursuing higher studies in the US. Her elder sister had shared some tips from her personal experience. However, Namya still ended up buying an insurance policy from the foreign insurer tied-up with the university. She paid around Rs 65,000 as insurance premium for a six-month policy, which was added to the semester fees. Later, she realised that a similar insurance policy bought from an insurer in India before travelling abroad would have cost her only about Rs 20,000 per annum.
Several students lack awareness on the things they need to do before travelling abroad for higher studies and end up incurring unnecessary expenses.
So, here are some money matters for a student going abroad to consider before embarking on the trip.
Apply for scholarships
This should be your first step in the admission process. Some of the scholarships especially available for Indian students wanting to study abroad are Inlaks study abroad scholarships, Stanford Reliance Dhirubhai fellowships for Indian students, Rotary foundation ambassadorial scholarship, American university emerging global leader scholarship and J. N. Tata Endowment for the higher education.
A scholarship given by a university or a trust offers financial aid in the form of tuition fees, living allowances, etc. The financial aid is decided at the sole discretion of the trustees of the concerned trusts. For instance, the amount awarded as scholarship ranges from Rs 1 lakh to Rs 10 lakh. All selected students do not necessarily qualify for the maximum amount. After completing the course, you don’t need to repay financial aid received from the university or trusts.
To be eligible for a scholarship, a student should be an Indian national, must have completed board examination or graduation from a recognised Indian University and have secured at least 60 per cent in his/her last academic examination. Students in the final year of the degree course and those awaiting results are also eligible to apply for scholarship.
Namya got a scholarship from the university where she is pursuing her undergraduate program. She offers some useful advice: “Research about the university you are heading to and check if you are eligible for the scholarships and grants that they offer. This can help you save a good amount of money, especially in your academic fees.” The application for scholarships and grants should be done at least nine to twelve months in advance.
If you are offered a fellowship, you will receive an internship or other service commitment from the university for a period of one year or more while pursuing studies. It may or may not include financial aid, but a student receives fellowship status within the university.
Purchase forex in India
While travelling abroad for studies, Namya carried 30-40 percent of her currency in cash for immediate smaller expenses such as food and cab services. The rest of the money was loaded in her prepaid forex card. Before buying forex or remitting money to a foreign university, she suggests keeping an eye on schemes specifically designed for students by authorised foreign exchange dealers. For instance, BookMyForex is launching a festival wherein a student remitting money to pay tuition fees to universities will get a cashback of up to Rs 2,500 on the forex card purchased from it and up to 25 per cent off on an international SIM card.
During the four to five years of their children’s education, parents can also support their kids financially via money transfer platforms. This can be done to pay university fees every semester, for living expenses, hostel fees, etc.
Sudarshan Motwani, CEO and co-founder of BookMyForex.com says, “Before flying abroad, buy foreign currency in India instead of exchanging currency abroad from banks or airports, since the conversion charges are high.” To get the best forex price and save time in research you can explore one of the online forex marketplaces, as they aggregate rates from multiple currency exchange vendors and banks to choose from.
Open a student bank account
Once you settle down, opening a bank account should be your top priority. A student bank account abroad is the safest and most effective way of managing your money, especially when the duration of the course is a year or more. Says Namya, “These bank accounts are useful to pay fees to the university every semester and deposit our pay-checks from part-time jobs.”
Most universities have relationships with banks so that international students could open accounts. You must visit the bank’s branch on campus with a set of documents to open an account. You will need to submit the following set of documents while opening a bank account – your passport with student visa, letter from the university confirming your admission and course details, your college ID proof, your local address proof, etc.
Generally, a bank account is opened in less than a week. Sudarshan adds, “However, sometimes the account opening process is delayed during the peak season (September and October), when most universities commence their courses and several international students are enrolled.”
Take time to research if the local bank on campus is more beneficial or if there are any branches of Indian banks in the foreign city where you would be studying. Once you have chosen an appropriate bank and opened an account, you can manage your finances with ease.
Buy a student travel insurance plan
Universities in the US and the Schengen area have made it mandatory for international students to have an insurance policy. It is optional in the UK, Australia, Singapore and Malaysia. Experts recommend not to miss taking a medical insurance policy before traveling abroad for studies.
Namya says, “Insurance really helped many students on our campus to cut down medical costs, which are otherwise very high in foreign countries. It’s really difficult for students to pay those medical bills from part-time work and savings during any medical emergency.”
Choosing the right insurance cover is crucial. Rohit Sethi, Director at consulting firm ESS Global says, “You can buy an insurance plan either from an Indian insurer or an insurer in a foreign country that has tied up with university. There are some universities that ask students to buy insurance from them. In such cases, you will have no other option but to accept whatever you are offered.”
You should opt for a student travel insurance, as it holds an advantage over regular policies. In addition to covering accidents and medical emergencies, student travel insurances also cover loss of baggage, passport and important documents. These insurance policies can offer cover for up to 2-3 years. However, a one-year policy with sum insured $5 lakh for a 20-year-old student costs in the range of Rs 11,000 to Rs 20,000 including taxes.
Make sure you do extensive research before buying the insurance policy. Rohit says, “The insurance you pick should provide cover for medical emergencies, expenses for dental treatment, accident, evacuation and repatriation, personal liability, tuition fee, travel and sponsor protection.”
When you have a tight budget, it’s better to go for a domestic insurance provider, considering the cost-effectiveness. The premium charged by Indian companies is significantly lower as compared to the rates offered by foreign insurers. However, if money is not a constraint, you can opt to buy the policy from a foreign insurer, as it will give a more extensive health cover. You must not overlook the minute but vital details in the policy such as the sub-limits and deductibles while buying.
Opt for prepaid forex card
A student should opt for prepaid forex card abroad instead of debit or credit cards for managing regular expenses. When you swipe your credit and debit cards abroad, banks charge you a foreign currency conversion fee (up to 3-3.5 per cent for each transaction) and a foreign transaction charge (of around 2.5 percent to 3.5 percent, again for each transaction). Further, every time you withdraw money from ATMs abroad using your debit/credit card, you will have to pay a withdrawal fee (1 percent to 4 percent of the amount withdrawn) to the bank.
Prepaid forex cards, on the other hand, have no forex conversion charges. This is because your currency is already converted before you leave India and loaded in to your card. So, every time you spend abroad, you are spending foreign currency, not Indian rupees converted to foreign currency. Further, it’s accepted wherever Visa and MasterCard are recognised. The forex cards can be topped up by you or parents when you are abroad. The forex cards are secured with a pin.Follow @thanawala_hiralGet access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.