Rupee depreciation: How Indian students can minimise the impact on overseas education budget

A depreciating rupee spells financial stress for Indian students abroad, as tuition fees, living expenses, and daily costs surge.

The Indian rupee's steady decline against the US dollar over the last few months has had an adverse impact on the budgets of students planning to, or already pursuing, studies abroad.

According to Bloomberg data, over the past six months, the Indian rupee has depreciated by close to 4 percent, weakening from Rs 83.75 per USD in August 2024 to Rs 86.95 per USD as on  February 18, 2025. In fact, it had slipped to 87.9563 against the dollar on February 10 before staging a recovery.

The impact of rupee slide

A depreciating rupee spells financial trouble for Indian students abroad, as tuition fees, living expenses, and daily costs surge. "Even a slight fluctuation can inflate their annual expenses by lakhs, making budgeting a daunting task," notes Sudarshan Motwani, Founder and CEO, BookMyForex.com.

“Rupee depreciation acts as hidden inflation for Indian students aspiring to study abroad, significantly increasing the cost of education, even if universities do not raise tuition fees,” says Eela Dubey, Co-founder, EduFund. This means that even if a university maintains its tuition fee in USD, Indian students end up paying more in INR terms solely because of currency fluctuations.

For instance, the tuition fee for one semester of an MBA at NYU Stern has risen by 3.53 percent per annum in USD terms over the past four years. However, for an Indian student, the effective increase is 6.79 percent per annum when adjusted for INR depreciation—nearly double the inflation rate in INR terms.

“Rupee depreciation has far-reaching consequences, affecting not just tuition fees but also everyday expenses like groceries, travel, and accommodation, which are all increasing in cost," notes Rahul Subramaniam, Co-Founder, Athena Education.

"The unpredictability of currency fluctuations makes it difficult for students and parents to budget for foreign education, worsening the challenge of financing. Furthermore, a weakening rupee leads to increased costs and higher debt burden, disproportionately affecting middle-class families," notes Prashant Bhonsle, Founder and CEO, Kuhoo Edufintech.

Mitigating rupee risk: Measures Indian students overseas can adopt

According to Motwani, students can optimise their finances abroad by adopting a three-fold strategy - utilising forex cards for daily expenses, wire transfers for tuition fees, and maintaining an emergency cash fund. By loading forex prepaid cards at a fixed exchange rate, students can shield themselves from rupee depreciation, ensuring stable spending. For instance, loading a card at Rs 86.75/USD can protect your wallet against a potential rupee slide to 87.47/USD.

Additionally, forex cards eliminate foreign transaction fees and DCC charges, making them a more cost-effective option compared to using INR-denominated credit or debit cards, which are subject to fluctuating rupee rates.

Traditional money changers and banks charge high mark-ups (2 percent to 8 percent), so opting for zero-markup forex services is an appropriate option.

To further streamline financial management, Motwani advises opening a local bank account abroad. Moreover, he suggests that financially-savvy parents can hedge against currency fluctuations by using forward contracts, thereby minimising potential losses.

Subramaniam advises students to minimise discretionary spending and consider cost-saving measures like shared housing. Additionally, where allowed, students can explore part-time job opportunities to boost their income. Many international students already adopt this strategy, taking on part-time work, internships, or teaching assistant roles to supplement their finances while studying abroad," he notes.

By implementing these smart financial strategies, students can effectively manage their international expenses with greater confidence and ease.

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How to hedge against rupee volatility risk

A comprehensive financial plan for studying abroad should comprise three essential elements: investments, education loans, and scholarships, according to financial advisors.

Investing in USD-denominated assets can provide a natural hedge against currency fluctuations, notes Dubey. For individual investors, passive US ETFs offer a straightforward and effective way to mitigate exchange rate risks while outpacing education inflation.

Alternatively, for those preferring to invest in Indian markets due to limited capital or tax considerations, diversified equity mutual funds with strong long-term growth potential can help counter both education inflation and rupee depreciation.

While exploring external financing options like loans and scholarships is prudent, Dubey advises against relying solely on them, emphasising the importance of personal investments as a financial safety net.

“Choosing lenders with lower interest rates, flexible repayment options, and customised loan structures can significantly reduce financial strain," says Bhonsle.

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Weak rupee a plus for students working abroad

Securing a job abroad can be a savvy move for students, as earning in stronger currencies like USD, GBP, or EUR allows them to repay loans in INR, thereby minimising the impact of a weak rupee.

According to Bhonsle, “A weaker rupee actually works in favour of students working abroad, making their loan repayments more manageable due to the currency advantage.” Effective loan repayment planning is essential to maximise this benefit.

While a weakening rupee presents challenges for Indian students studying abroad, careful planning, diversified financial management, and strategic destination selection can help minimise its impact.