Want to send your child overseas for studies?
As parents, many of you might want your children to go abroad for higher studies. Isn’t it? However, higher education in foreign countries can be an expensive goal. Though it varies from one country to another, in general, it is much higher than what Indian graduation and post-graduation courses cost.
I don’t know which is the cheapest country for Indian students to study abroad. But it’s not about the cheapest course but about courses in countries that have good prospects of employment after course completion. Right?
So which country is best for Indian students to study abroad? It depends on the course in which admission is sought and several other factors. But in this post, we focus on how much does overseas education cost or what is the cost of studying in major foreign countries that many Indians go for completing their studies.
But given that foreign education can be very costly, chances are that you as a parent may be unable to fund it fully using your savings. If that’s the case, you can take an education loan to bridge the funding gap. But we will get to that a little later in the post.
I came across two interesting articles (link 1 & link 2) about how much does it cost to study abroad from India. It gave some good pointers if you want to find out the cost of studying abroad for Indian students in the USA, UK and Canada, which are amongst the popular destinations for Indian students these days.
I will share a few data points from the above-linked article in a bit.
But a common trend across all cost estimates is that not surprisingly, the tuition fee will be the prime expenditure. The actual expenditure on tuition or course fee will depend on the type of course/degree and the university chosen. While courses in arts, humanities, etc. are comparatively cheaper, those in engineering, medicine and management (MBA) are generally more expenses. Other expenses include living expenses like accommodation, food, grocery, health coverage, social activities, travel, etc.
So let’s look at the higher educations costs in different countries.
Cost of studying abroad for Indian students in the USA
How much will it cost to study in the USA?
When it comes to tuition fee, the cost of study can be close to $25,000 per year. But this can easily go up to $50,000 per year depending on the course-college combination.
So if you ask me that what is the cost of studying in the USA for Indian students in Rupee, then the answer would be around Rs 15-40 lakh per year depending on the course and the college being chosen. So it varies drastically from location to location and also across public and private colleges.
What about living costs in the USA for Indian students?
In the US, the average cost of living is about $16,000 per year or you can say that it may be between $800 to $1500 per month depending on the college’s location and whether the student chooses to live on or off-campus.
Cost of studying abroad for Indian students in the UK
How much will it cost to study in the UK?
When it comes to tuition fee, the cost of study in the UK can be close to $20,000 per year. If you asked about what is the cost of studying in the UK for Indian students in Rupees; then the answer would be around Rs 15-20 lakh per year depending on the course and the college being chosen.
What about living costs in the UK for Indian students?
As per the article, “In the UK, rent and living costs are between $16,000 and $22,000 per year. Most undergraduate degrees (except for languages and medicine related programs) tend to last for three years in the UK. That makes a total cost of living of $48,000 – $66,000 for the duration of a UK undergraduate degree program. This price is likely to increase if you choose to study in one of the more expensive cities, such as London.”
Cost of studying abroad for Indian students in Canada
Canada is another country that is getting lots of interest from Indians these days. So how much will it cost to study in Canada?
“Depending on the course and university, fees in Canada can be as low as $7,500 and as high as $26,000, bringing the average tuition to $12,000.”
As for the other expenses, “the cost of living in Canada for students averages $10,000 per year, although it can be as low as $8,550 or go up to over $13,000.”
Cost of studying abroad for Indian students in Australia
How much will it cost to study in Australia?
The tuition fees are about Rs 10-16 lakh per year for an undergraduate course while Rs 12–18 lakh per year for a postgraduate course. With regards to the cost of living it can be about Rs 70,000 to Rs 1 lakh per month.
Cost of studying abroad for Indian students in Singapore
Singapore is the nearest country to India which offers decent higher education options and as a result, is getting lots of Indian students inflow.
The tuition fees are about Rs 7-15 lakh per year for an undergraduate course while Rs 10-25 lakh per year for a postgraduate course. With regards to the cost of living it can be about Rs 50,000 to Rs 70,000 per month.
That is the cost of studying abroad for Indian students in rupees for various countries. So you can clearly see, the answer to the question of ‘How much does overseas education cost?’ is – it costs a lot.
Is there a way to reduce these high costs?
Yes. But it’s not available to everyone.
I am talking about Scholarships
Scholarships to study abroad for Indian students
Most countries and universities offer several scholarships and financial aid options for deserving international students.
Some are Merit-based scholarships while many others are Need-based scholarships. Then there are some unique destination-specific, program-specific and subject-specific scholarships open for international students in various countries abroad.
So if your child needs some help to bring down the educational expenses abroad, it is best to apply to various scholarships available for Indian students. They may get it or not. But applying is a good idea as any amount received as part of scholarships will help manage the cost of studying abroad from India.
And how to fund the expenses if your savings as a parent aren’t enough? Or even if your child is a working professional planning to pursue an MBA after a few years of work experience and even his savings aren’t enough for the course fee?
The answer is education loans.
Education Loans for Indian student studying Abroad
Most Indian banks offer foreign education loan of up to Rs 50 lakh for the overseas education of your children.
The interest rates offered on these loans for overseas studies range from 9-15%. The loan amount can be used to cover expenses of tuition fees, living expenses, travel expenses, expenses related to books, equipment, library and examination and insurance premium for the student.
An important requirement for an overseas education loan is that it needs a co-applicant, which can be a parent, spouse or sibling. The idea is that banks want to safeguard their interests. If the borrower goes abroad during the repayment period, the lender will recover the outstanding loan from the co-applicant.
And I am sure you know that you can some income tax benefit for servicing education loans as well. The interest paid on an education loan can be claimed as a deduction under Section 80E with no upper limit. This helps reduce the effective cost of the loan. But do note that this tax benefit is available only for 8 years beginning from the year in which deduction is first claimed.
So all said and done, we know that different countries have different educational costs from the perspective of Indian student. Can we generalize these numbers then?
I think we can take a shot and hazard a guess.
Cost Estimates for Foreign Education for your Children
As a parent, you may want to know how much does it cost to study abroad from India. But in different countries, different courses have different costs.
Studying abroad can be prohibitively expensive. There is no doubt about it.
But if your child is still young and you want to estimate to gradually make up your mind, then here are few pointers. One year’s tuition fee in some good colleges can be almost Rs 30-50 lakh! Even ordinary colleges can cost about Rs 20 lakh a year. Then there are other non-tuition fee costs. If you take the cost of living, comprising accommodation, conveyance, academic supplies, health insurance and entertainment, add another Rs 10-15 lakh. While studying abroad, a student may have to deal with unforeseen expenses. So some buffer for such expenses should also be considered.
And remember about the exchange rate movement. Rupee historically has depreciated. Here is a snapshot of USD-INR exchange rate movement since 2003:
So depending on how the exchange rate moves between today and the day of course fee requirement, the actual fund requirement can change drastically with the fluctuations in the exchange rate. Unless you plan for this risk, you will end up falling short of the required amount.
Then there is inflation.
If you have to take a figure to send your child abroad for higher studies, then keep a target of at least Rs 50-60 lakh. In today’s value. Factor in 7-10% inflation to calculate the future cost. This can also include a buffer for adverse exchange rate movement. So let’s say if your child is 7-8 years old currently, then he/she will go abroad in about 10 years. And adjusting for inflation, the present course expenses of Rs 50-60 lakh would become Rs 1-1.4 crore by then.
I know that looking at these large numbers can be scary. At least for you as parents who want the world for your child. But these numbers are still achievable if you start investing early for goals like these.
I did a post on this specifically. How to get Rs 1 crore on your child’s 18th birthday?
Go through the post to know how it can be done with a bit of time and discipline and to find out how much you need to save every month to reach the goal of Rs 1 crore comfortably.
Remember that you need to invest in the right investment options. If you have several years before you need the money for your children’s higher education, investing heavily in equity funds can be a good idea. But picking the right mutual funds is extremely important.
Now let me talk about one more important point. And this is extremely important for the emotional Indian parents.
Child’s Education Vs Retirement
Remember one thing. Your child will get an education loan. But you will not get a loan for retirement. That’s the sad reality.
And if your child studies abroad and decides to not come back (and become NRIs who don’t plan to return to India instead of NRI who plan to return back) then you will be alone in retirement and you will need money. It’s a scary picture to paint but I have to. It’s necessary.
As an investment advisor, I often get asked by young parents: Should I delay saving for my retirement as I need to first save for my child’s future education & marriage?
It’s true that children’s education comes several years before retirement. And this is a good enough reason to give it a higher priority than their retirement.
But as I said earlier – your children can get loans for education, but you will not get any loans for retirement.
It is for this very reason that saving for retirement is extremely critical. And if you don’t save enough for retirement, then eventually, it’s you who will become a financial burden on your children. Right?
And please don’t be under the impression that your PF is good enough for retirement. No, it’s not true. Your PF savings are not enough for retirement. And unlike our parents and grandparents, we live in a no-pension era. We are really on our own now.
Side-Note: A column of mine on this topic was published in MoneyControl India here – Retirement vs child’s future: What should you prioritise?
So how to do you prioritize one over the other? Or is there another way out?
Retirement is important. And so is your children’s future.
If you really wish to take care of both optimally, then you need to begin saving for both of them early.
And I know it may sound harsh but financial prudence is in prioritizing your retirement savings. That means you should focus first on contributing adequately to your retirement savings and then save what’s left for your child’s education. If you can save sufficiently for his/her foreign education then great. If not, then save for basic higher education in India itself. That will work out fine as well. Most of us studied and India and its fine here too.
I know that most parents will still prioritize children’s education. And to be fair, this cannot be questioned.
But at the end of the day, it’s not a choice between retirement or children’s education. It’s more about retirement and children’s education. So figure out a way to tackle both. And if you are unable to do so, then take the help of an investment advisor to create a financial plan for you.
So that’s it.
Whether is the cost of studying abroad for Indian students in the USA or it’s about the cost of studying abroad for Indian students in the UK or its the cost of studying abroad for Indian students in Canada or the cost of studying abroad for Indian students in Singapore or the cost of studying abroad for Indian students in Australia, you as a parent need to start saving early once you have got a good target in mind as we discussed all through this post.
The real answer to how much does it cost to study abroad from India depends on the choice of 3 Cs, i.e. course, college and country.
I hope that if you were looking to find out the cost of studying abroad for Indian students, then you got some useful pointers.