Are you ready to spend up to Rs 30-40 lakh per year for your child's education abroad? On average, studying at a college in the UK costs about that much, which is lower than the expenses in the US and Australia. College abroad is expensive. For many middle and upper-middle-class families, hence, the dream of sending their child to a top college abroad requires careful financial planning.
With rising tuition fees, living expenses, and unpredictable currency fluctuations, managing your finances effectively is crucial for a smooth and stress-free educational journey.
Where to begin?
Parents today start planning for their child’s education right after birth, thanks to increased financial literacy.
“To manage education costs effectively, it’s essential to adopt a proactive investment approach, starting early to harness the benefits of compounding,” says Vinnaayak Mehta, Founder of Infinity Group.
Major expenses to consider
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To determine if you can afford an education abroad, you must first research and plan for the major expenses. These include:
- Tuition fees
- Accommodation
- Living expenses
Total annual cost of studying in the UK
The University Living Indian Students Mobility Report 2023-24 details the average expenditure per Indian student for the year 2023-24:
Academics: £20,468 (Rs 21,64,881)
Accommodation: £7,633 (Rs 8,07,332)
Other living expenses: £7,321 (Rs 7,74,335)
Total expenditure: £35,426 (Rs 37,46,976)
Student budget calculator
Many universities offer student budget calculators on their websites. These tools help students estimate their annual expenditures by inputting their chosen university or prospective study location. They provide a breakdown of costs, including tuition fees, accommodation, food, transportation, and other personal expenses.
Key questions for parents and students to consider
Before embarking on the journey of applying for education abroad, parents and students should address several critical issues and concerns. Here are the key questions to consider:
What are the total expected costs?
One must assess the total expected costs, including tuition fees, accommodation, living expenses, travel, and health insurance, in relation to the universities they plan to apply to and the cities they will live in.
What funding options are available?
"Thorough research on various funding sources, such as personal savings, loans, scholarships, and grants, is essential. This helps in determining the funding required to support the expenses for the entire period of study," Krishan Mishra, CEO of FPSB India explains.
“There are numerous scholarships, bursaries, and grant schemes to assist Indian students. Over the past three years, scholarships worth GBP 6 million have been disbursed to Indian students,” says Rittika Chanda Parruck MBE, Director of Education India, British Council.
Notable scholarships in the UK
GREAT Scholarships: Offered by the British Council and the UK government for one-year PG courses.
Women in STEM Scholarships: For women pursuing postgraduate courses in STEM.
Commonwealth Scholarships: Covering tuition fees, living expenses, and travel costs for postgraduate studies.
Charles Wallace India Trust Scholarships: Aiding Indian students, professionals, and artists in the UK.
Chevening Scholarships: For outstanding future leaders to pursue one-year master’s degrees.
How do currency fluctuations affect the budget?
“Assess how changes in exchange rates might impact your budget and plan accordingly to mitigate risks. Currency fluctuations can significantly alter the overall cost of education abroad,” says Krishan Mishra.
Let's understand how the change in the college fee for Anuj, an Indian student, works due to currency fluctuation:
Exchange Rates:
2014:
1 GBP = Rs 98.943
2024:
1 GBP = Rs 105.84
College fee in 2014:
Anuj paid GBP 20,217 or Rs 20 lakh per annum for his college in the UK.
College fee in 2024:
Anuj paid GBP 20,217 or Rs 21.41 lakh per annum for his college in the UK.
Due to the weakening of the Indian Rupee against the British Pound, the same college fee increased.
What is your risk appetite?
Evaluate and decide the appropriate mix of investment options based on your risk appetite.
Risk appetite in investment refers to the amount of risk an investor is willing to take on in pursuit of potential returns. It varies from person to person based on their financial goals, time horizon, and personal comfort with uncertainty.
For instance: Imagine two investors, Akash and Siddharth
Akash has a high risk appetite. He is willing to invest in volatile stocks because he is seeking high returns and is comfortable with the possibility of significant fluctuations in the value of his investments. For example, Akash invests in a tech start-up, which could either grow rapidly, yielding substantial returns, or fail, resulting in a total loss of his investment.
Siddharth has a low risk appetite. He prefers stability and is more concerned with preserving his capital than achieving high returns. Siddharth chooses to invest in government bonds, which offer lower returns but are considered very safe and have minimal risk of losing the principal amount invested.
Understanding your risk tolerance is crucial for selecting the right investment strategies.
What insurance policies are necessary?
Consider what insurance policies are necessary to protect against unforeseen events. Comprehensive insurance coverage can safeguard against unexpected financial burdens.
"Healthcare expenses can be substantial if you’re studying in the UK. In developed countries, these costs can be 70% higher than in India, making comprehensive medical coverage essential," says Amit Chhabra, Chief Business Officer at Policybazaar.com.
— University or local health plans usually cover only campus or nearby areas.
— If studying in the UK and travelling to Scotland, you may lack comprehensive medical coverage.
Student travel insurance is a valuable addition to university plans. A comprehensive travel insurance plan from India typically costs only 1-2% of your overall college fees and is nearly one-third cheaper than buying it abroad. "For instance, if your yearly fee is around Rs 15 lakh, a policy from India would cost only Rs 14,000-15,000. These plans combine travel and health insurance, offering comprehensive protection to students," Amit Chhabra explains.
This policy covers various expenses while travelling abroad, including major medical costs in emergencies, reimbursement for delayed or lost baggage, trip cancellations, family visits, and other unexpected expenses.
Student travel insurance purchased from India is valid in the UK.
What are the post-graduation employment and income opportunities?
"Evaluating potential employment and income opportunities post-graduation, along with the overall return on investment (ROI) of studying abroad, is essential for making informed decisions about the financial feasibility and value of the education abroad experience," says Vinnaayak Mehta.
Employment opportunities:
Graduate visa route
The graduate route visa allows international students to work in the UK for two years after graduating from British universities, including top institutions like Oxford, Cambridge, Sussex, and SOAS. This visa is crucial for students seeking work experience and potential pathways to permanent work visas.
University placement prospect
Reputed universities in the UK, such as the University of Oxford, University of Cambridge, Imperial College London, and King’s College London, have well-established placement cells to help their graduates secure positions at top organisations.
Register with a recruitment agency
The market has many recruitment agencies offering end-to-end solutions for job applications abroad. Candidates should carefully choose a reliable and well-referred brand such as Adecco, Impellam, Hays, Reed, etc., and work with them to plan their applications. After registering with an agency and maintaining good records, candidates can easily find suitable jobs that fit their profiles.
Career events and job fairs
Career Centres at universities are excellent starting points for the job hunt. Some of the top universities in the UK organise webinars, career events, and job fairs to help graduates connect with employers and explore job prospects. This gives them a clear understanding of the job market and the most in-demand skills for their desired roles.