COVID impact: Plan to study abroad this year? Tough money decisions lie ahead

The ongoing lockdown due to the COVID-19 pandemic has sent graduating students into a tizzy. Those looking to go abroad for higher studies are worried as well.
Twenty-seven-year-old Tripti Jaju from Pune was on cloud nine in December 2019, as she got admitted to Purdue University in the United States of America (USA) for the Master’s program in Finance. She was to start her course from August 2020. But, the lockdown in India since March 25 and travel restrictions imposed by the US, has made her anxious. She is now diligently watching the news about the pandemic and following up with the university.
Nineteen-year-old, Avishek Ghosh from Kolkata has acceptance letters from multiple colleges in Canada for his four-year undergraduate program in business communication. But unfortunately, his father lost his job in March 2020, as he worked in the tourism sector – the worst affected segment in the COVID-19 pandemic. His father was supposed to be a guarantor to the education loan. Now, he is concerned, as banks will not process his education loan application.
The worst part is that since COVID-19 has affected most countries worldwide, no matter where Indian students planned to go, there is uncertainty. According to a survey done by study choice platform Studyportals, 40 per cent of potential international students want to change their overseas education plans due to the COVID-19 outbreak.
Fewer job opportunities abroad
Students who are set to go abroad for pursuing their post-graduate courses, might face tough times ahead. The economic impact of COVID-19 is already visible in most economies across the world, especially in the US, Italy, UK, Spain, Australia and Canada. These are also favoured destinations for higher education. 
The question is: will they get jobs there once they are done with their studies?
“The students and their parents need to consider a possibility of prolonged slowdown in these economies, and therefore, low probability of finding an employment there after graduating”, says Parijat Garg, a financial advisor. The cost of education abroad is significantly higher than in India. 
Education loans run to over Rs 40-50 lakh for studying abroad. “If the child doesn’t find employment in that foreign country and she plans to return to India for work, then it’s important to know for the parents and the child that the income level in India may not be enough to repay the foreign education loan equated monthly instalments (EMIs). So take the decision wisely.” says Parijat.
First, check if your bank can offer you lower interest rates. Understand whether your chosen university offers any additional incentives such as waiver in fees and scholarship to international students. Banks also charge 2-3 per cent of the loan amount for overseas fee remittance. Search for cheaper alternatives.
Defer your foreign education plan
In case you are planning to study in the US, Canada, UK or Australia, then it’s important to know that most of the universities may allow deferrals in admission by a semester or a year. Says Dhaval Mehta, founder and CEO of TNI Career Counselling, “Write an email to your university inquiring for deferrals in the admission process and fees.”
If you defer your foreign education by a year, make sure you utilize the interim time well. Take a course here or a job to get some work experience and then go to your foreign university a year later.
Garg says, “If parents firmly believe it’s best to cancel the admission then request the foreign university to cancel the admission and refund the fees paid by applying on the student portal or send an email to the admission department of the university.” 
Each university will have its own refund procedure. You will also have to cancel the education loan if it’s sanctioned. There will be charges applicable for cancelling the education loan.
Retirement corpus not meant for funding studies
Avishek’s father feels that funding his child’s education from his retirement corpus is important at the moment. So, he plans to withdraw from his retirement savings if banks don’t lend. Warns Vishal Dhawan, certified financial planner and founder of Plan Ahead Wealth Advisors, “Never touch your retirement corpus for funding your children’s education goals. This will have a negative impact on your retirement.” After retirement no bank gives loans to meet your day-to-day requirements.
What if parents plan for the foreign education, but there is a job loss or reduction in income due to COVID-19?  “Then, parents should tell the children that they will partially fund their children’s foreign education from their savings. 
Encourage your children to be responsible, to study hard and ask them to apply for scholarships or financial-aid from the foreign university while studying,” says Gaurav Mashruwala, a certified financial planner.
A weak rupee adds to costs
In the last seven weeks, the rupee has depreciated over eight per cent against the US dollar. This has forced parents to rethink the overseas education plans of their children.
Sudarshan Motwani, Founder and CEO, has a different view. He says, “Rupee depreciation will not have such a deep impact on foreign education. While making a financial plan for the education goal, it’s taken into consideration by financial advisors.” But that applies to those who have planned for their children’s education much in advance.
The depreciation of the rupee against all currencies is not equal. Dhawan says, “Parents have to look at currency movement of the specific country where their children are going to study rather looking only at USD and INR change.”
Buy a student travel insurance plan
It’s important for students to take a medical insurance policy while travelling abroad for their studies. However, choosing the right insurance cover is crucial. You can buy an insurance plan either from an Indian insurer or an insurer in a foreign country that has tied up with the university where you plan to study. For instance, a one-year policy from Indian insurer with sum insured of $500000 for a 20-year-old student costs Rs 11,000 -Rs 20,000, including taxes. 
This policy covers accidents and medical emergencies while studying abroad. It also covers loss of baggage, passport and important documents.
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. Dhawan says, “If money is not a constraint, you can opt to buy the policy from a foreign insurer tied up with the university, as it will give a more extensive health cover, taking into consideration the COVID-19 pandemic.”

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