The economics of studying abroad: A guide for students and parents

Sending your child abroad for higher studies is no mean task, as it costs a lot. Today, affordable options like Ukraine, Russia, and China are under a cloud due to geopolitical reasons. Studying in the US and UK has always been expensive, and other popular destinations like Canada, New Zealand, and Australia are increasing fees and tightening visa regulations.

It costs the moon

Consider a typical three-year undergraduate course in the UK at a reputed college. Tuition fees alone would be around £30,000 per year, totaling nearly £90,000 for the course. Accommodation in London, even a shared or hostel setting, could cost about £600 per month, with food and transport adding another £300 monthly. Overall, it would come to approximately £1,000 per month beyond tuition fees. Adding up all these items, you are set back by about £1,30,000 to £1,40,000 on a conservative basis over the three-year course.

At the current exchange rate of Rs111 per British pound, this would mean shelling out ₹1.45 crore to ₹1.55 crore. Add another 10% to that for the counselling charges, visa costs, ticket costs, and health insurance, it comes to about ₹1.70 crore. So, how do you make this?

Start saving when your kid is in middle school

Planning for at least 10 years helps. A monthly SIP of ₹30,000 in an equity fund with a CAGR of around 14% could yield around ₹75 lakhs in 10 years, covering about half of the total cost. That is a good place to start. Now, one can explore other funding options.

Education loans and assistance

These are two different things. Education assistance comes from several trusts and corporates. One can talk to the employer to aid in exchange for a quid pro quo by your child when they are studying abroad. Many companies also provide education assistance with the condition to do their mid-term project with the company.

Education loan options may be limited for international studies and the banks would insist on collateral for such loans. Take a call accordingly and decide. Also, several countries fund students from abroad.

Save on housing, find part-time jobs

Let your son or daughter learn the value of money early on. First, ask them to talk to the Indian community in the chosen country and get help to find the cheapest accommodation. Ensure it is conducive to studies.

They can avoid eating out. It is not only costly but also unnecessarily adds to your calories. Also, they can take up a part-time job. Most colleges offer private tutoring to students, and professors may also recommend it. They can help professors with projects for consideration. Above all, Starbucks and McDonald's are always willing to hire students. 

Student discounts 

Many countries offer discounts to students on food and clothing. Students need to carry their ID and avail discounts at most stores. One needs to maintain a healthy lifestyle to avoid costly healthcare expenses and ensure health insurance is updated.

Practice austerity

Students should use affordable modes of transport like walking or cycling. One can make the best of public transport concessions on buses and trains and travel by a shared cab. One should be self-sufficient and cook their meals instead of eating out.

Heads up: Parents should start planning early and aim to cover as much of the education cost as possible. Encourage your child to contribute to the cost at a later stage and to practice austerity.

(By arrangement with livemint.com)