COVID-19 and costs: You might want to reconsider your child’s education in a foreign university

Representative image

Jaslene Bawa 

The COVID-19 pandemic is prompting a number of prospective students to review their plan to join foreign universities in the new academic year 2020-21. Many foreign universities have cancelled on-campus visits and in some cases admissions until further notice. They have transcended to offering virtual tours for admissions. However, personal visits to the campus remain cancelled until further notice. A few of the universities are accepting admissions online. But when can a student physically join the campus remains a big question mark in the minds of prospective candidates.

Parents are concerned about their wards’ health, safety and future. ‘What if the pandemic becomes severe again? Will my child be sent home? What if my child can’t travel due to travel restrictions imposed in a country? How will he/she manage in such a dire situation?’-- These are a few questions in the mind of every parent who had plans to send their ward to a foreign university after their twelfth standard.

However, one need not despair. India has many options of liberal arts colleges that offer a unique bouquet of courses and have a well-endowed infrastructure. It might be a good idea to explore Indian universities as the cost involved is one-fifth or lesser of the foreign universities. In addition to the cost savings, a high faculty-to-student ratio, top academic scholars, diverse student body, world-class infrastructure and global student exchange tie-ups with esteemed universities abroad will give your ward an opportunity to experience world-class learning with the comfort of safety.

The cost of overseas education is a critical factor here. With the lockdown extended until May 31, 2020, global economic growth forecasts are dire. The International Monetary Fund (IMF) has reduced the projected Real GDP growth to 1.9 percent from the 5.8 percent projected in January 2020 (Source: IMF). The unemployment rate in India as of April 2020 has reached 23.52 percent (Source: CMIE). Rising layoffs, fewer employment opportunities in the offing, salary cuts announced at various companies, saving rates dropping, banks reluctant to lend with non-food credit growth at abysmally low single digits of 6.6 percent as on April 24, 2020, from April 26, 2019, (Source: RBI Weekly bulletin), and uncertainties regarding future prospects make education outside India a very difficult proposition. It may be a good idea to explore world-class options in India.

Higher rupee outflow

Studying abroad has been a rising trend over the past few years. It has not only led to a higher rupee outflow through outward remittances but also a brain drain for our country.

Of the total outward remittances worth $13.8 billion in 2018-19 under the Liberalised Remittance Scheme (LRS), education (tuition fees) remittances formed 25.9 percent of the outflow. This percentage increased for the period April 2019 to February 2020 to 26.9 percent of the total remittances worth $17.4 billion.

A glance at the monthly outward remittances for studying abroad indicates that March 2018 had remittances worth $134.1 million which has increased to $496.87 million in February 2020, a 270.5 percent increase over the past 24 months. Remittances for education abroad as a percentage of total outward remittances have been on the rise from 12 percent in March 2018 to 29 percent in February 2020.

With the rupee depreciating at 4-5 percent on average every year against the US dollar and uncertainty in the global and local economy, it might be a good option to review the decision to study abroad and consider studying in India.

Jaslene Bawa is faculty of finance, FLAME University.