As rupee tanks, students abroad work longer, seek more loans

September 1 2013

MUMBAI: The rupee's free fall against the US dollar and the UK pound is turning out to be a major source of concern for Indian students returning to campuses after their summer breaks. These students, faced with a currency which has depreciated more than 20% this year against the US dollar alone, are scurrying around to arrange for additional funds to complete their courses and get their dream jobs.

Unlike the fresh intakes who can possibly defer their admissions, these students are feeling the heat in a big way. Having taken loans when the rupee was at 50 to the dollar, they are seeing their overall expenditure go up by anywhere between 10-20%.

HDFC Credila, which specializes in education loans, said it is open to providing additional loans so that these students can finish their courses. PSU banks such as the State Bank of India said they will approach the Indian Banks' Association if there are requests for enhancement of loan amounts from existing borrowers. Banks are also contemplating extending the repayment period of loans taken to pursue higher studies abroad.

Atin Rajvanshi, an MBA student from Hong Kong University of Science &Technology, who is going for an exchange programme to London Business School during the fall semester (September to December 2013), said his budget for the UK stint has shot up by over Rs 2 lakh. "I am asking relatives if they can give me a loan with a lower interest rate as compared to banks. This has come as a big blow for students who have opted for exchange programmes in the US and UK," Rajvanshi said.

With the rupee see-sawing, import of diamonds, steel and electronic components, among other goods, have come to a halt in Mumbai. Orders were being placed at a steep Rs 55/dollar, but the free fall to Rs 68 has spooked everyone. Mumbai: Sonal Parekh, who runs Edu World, a studyabroad counselling agency, said a lot of her students who have completed their first year in the US or Canada, are staying put at their universities for the next year but are making other financial arrangements to shell out higher fees on account of the rupee fall. Some of them are taking additional loans, while others who have not exhausted the weekly 10-hour labour permit are working longer hours. "There are many who have shelved their holiday travel to Europe or Mexico. Many who planned to come home for Christmas are staying put and taking up jobs as they can work 40 hours a week," said Parekh.

Students typically get their loans sanctioned six months prior to commencement of their programmes, so a second-year MBA student picked up his/her loan amount at the beginning of last year. Banks usually directly pay the loan amount, which is the tuition fee, to the university in a few tranches.

While MBA students do not usually work along with pursuing their courses, MS students, experts said, will be able to pick up jobs to make up for the deficit.

Prashant A Bhonsle, country head, Credila, said they were looking at students who have come back for loan enhancements on a case-to-case basis. "We do not want students to give up mid-way, so we are ready to help them," he said. Almost 45% students who take loans from HDFC Credila go to do their MS courses, while about 40% pursue an MBA.

An SBI official told TOI that no clause governs the bank to aid students with additional loans, but if the IBA makes a provision, they will help students by enhancing their existing loans.