THE FINANCIAL ANGLE

Congratulations! you have been admitted to your dream school. As you start preparing for your new journey, an important element to consider is financing. Understanding and navigating through financial aid documents, loan repayment details, tuition schedules and cost estimates can be difficult, especially if you are paying in dollars while earning in rupees, given the currency exposure you will be taking on. Here are a few useful tips to pack as you embark on your journey:

Exchange Rates: How can I get the best rate? The first step is to understand where you will be getting the best rates on your foreign exchange. Often, banks charge a premium above market price, so compare rates across banks as well as across authorised RBI licensed moneychangers, to identify where you are likely to get a better deal. Finding an RBI- licensed moneychanger can be an arduous process. However, there are multiple online aggregators that have done the vetting process for you, which will probably be an easier and better bet.

The remittance process: What do I need to do? It’s imperative to understand the different options you have to remit large sums of money like your tuition fees, and whether the source, which is your own funds or a student loan, makes a difference in the remittance method. In either case, it is not necessary to remit your tuition fee to the university using the same bank, and you can explore options such as aggregators of Certified Money Changers (who are RBI-licensed money changers) that they can help you save more.The added advantage offered by an aggregator of Certified Money Changers is that even if the bank in which you hold an account does not offer the best rate and you would like to use the online international money transfer services of some other bank, you can do so easily. With an aggregator of Certified Money Changers, your funds are transferred from your bank account to the bank with the better rate, without your having to open a new bank account with them. However, with wire transfers if you wish to avail services of a bank offering a great rate, you generally will only be able to do so by opening an account with them.

Student loans: Have I understood the loan repayment scheme? If your loan is in US dollars then very often repayment calculations are incorrect, and you could end up paying a very different amount. The reason for this discrepancy is the exchange rate. For example, if you were approved for a $30,000 loan in the USA but will be remitting the instalments from India, you cannot actually determine the exact figure you have to pay as the principal loan amount, as the dollar rate is variable, not static.A simple example to illustrate the point: if your annual installments are $10,000 then:Instalment 1: $10,000 = Rs6 lakh (if the exchange rate is $1 = Rs60)Instalment 2: $10,000 = Rs6.5 lakh (If the exchange rate is $1 = Rs65)It is critical to take this extra expense into account while planning your college education, so that you are not in for a nasty surprise as your fee payment is in dollars and not in rupees.Travel Card: Should I get one? There are a number of initial expenses you will incur immediately on arrival at your international study destination. You can cover these by procuring and loading a travel card till a new bank account is opened abroad. In case the balance on the card is exhausted before the new account is opened, you can conveniently get a relative or friend to reload the card from India.

Documentation: Did I read the fine print? Whether you are ready to leave to study abroad or are on campus already, you don’t want to get caught in long waiting periods with a financial institution. It’s imperative that you do your homework thoroughly, understand the technical paperwork, research processing times and all costs associated with payments and services.By researching the best rates, the remittance processes, loan repayment schemes, paperwork and having a travel card as a backup, you can embark, well-prepared and with peace of mind.

— The writer is Founder & CEO, ReachIvy — an education and careers advisory

ABOUT THE COMPANY

ReachIvy is a premium education and career advisory that helps aspiring students get accepted into top tier educational institutions globally. We have successful admits at MIT, Columbia, Harvard, University of Pennsylvania, London School of Economics, University of Michigan, Oxford, University of Chicago amongst others.

Vibha Kagzi, Founder and CEO, ReachIvy, holds an MBA from Harvard Business School, and a Bachelor of Science from Carnegie Mellon University. She has also pursued courses at the University of California, Berkeley, the London School of Economics and the Indian School of Business.

Our global team of counsellors have also acquired their degrees from premier institutes and are passionate about sharing their experiences with students worldwide.