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Rupee Depreciation Forces Indian Students to Seek Additional Loans for Overseas Education
Rupee slide pushes overseas students back to lenders for top-up loans
The Economic Times
Image: The Economic Times
The depreciation of the Indian rupee by over 10% against the US dollar has led to a surge in demand for top-up education loans among Indian students studying abroad. Many students face funding gaps, prompting them to seek additional loans ranging from ₹1-6 lakh for tuition and living expenses.
- 01The rupee's decline from ₹85 to approximately ₹95 against the dollar has significantly increased the cost of overseas education.
- 02Demand for top-up loans has nearly tripled, with students needing additional funds to cover rising tuition and living expenses.
- 03Banks and non-banking finance companies (NBFCs) are experiencing delays in loan processing due to the need for fresh documentation and enhanced sanctions.
- 04The overall education loan book of Indian banks reached ₹1.55 lakh crore, with a significant portion linked to overseas education.
- 05Students are increasingly considering studying in India for foreign degrees to avoid the financial burden of currency depreciation.
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The Indian rupee's depreciation by more than 10% against the US dollar has left many students studying abroad struggling to meet rising tuition and living costs. As a result, there has been a nearly threefold increase in demand for top-up education loans, with students seeking additional amounts ranging from ₹1-6 lakh. For instance, Mumbai entrepreneur Sunetra Banerjee noted that her family has already spent ₹7-8 lakh more than expected in the first year of her daughter's studies in the US. The total outstanding education loan book for banks, including both domestic and overseas education loans, reached ₹1.55 lakh crore as of March 31, reflecting a 13.4% increase from the previous year. The State Bank of India holds a significant share of this market. The process of securing top-up loans is complicated by the need for fresh documentation and reassessment of financial conditions, leading to delays in disbursement. Consequently, some students are considering studying in India for foreign degrees, which can be more affordable and paid in rupees, mitigating the impact of currency fluctuations.
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The depreciation of the rupee is causing significant financial strain on families funding overseas education, leading to increased loan demands.
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