The choice to study abroad may seem very daunting but it can also be one of the best decisions you ever make. Although studying and living in a foreign country can be overwhelming and rife with challenges such as homesickness and financial instability, it also offers many potential advantages. The experience can help you expand your cultural horizons and develop a more ‘glocal’ (global + local) mindset, especially if your home country has a completely different cultural or social ethos. Life as an international student can also help you develop your people skills, make you more independent and challenge you to consistently learn, do and be more. And as the world becomes increasingly ‘flat’, pursuing education outside the comfort and familiarity of your home turf can improve your international career prospects manifold.
Unfortunately, many aspirants are unable to convert their ‘study abroad’ dream into reality because they lack adequate knowledge about the necessary financial considerations involved in the process. Even if they do realise their dream, insufficient initial planning means that their dream is often tainted by the constant struggle to stay financially afloat. Worse, they endanger their future financial health as well.
In this article, we have compiled a list of practical questions and tips regarding important financial prerequisites that every aspiring international student must consider before taking the final leap. Use this information as a starting point in your planning process so that you have the grand, once-in-a-lifetime study abroad experience you’ve always dreamed of.
SECTION 1: FINANCIAL PREREQUISITES YOU MUST CONSIDER BEFORE YOU LEAVE
What Is My Student Profile & Why Does It Matter?
Knowing yourself is the key to understanding the expected cost of the programme you want to study. All other financial considerations aside, programme cost will probably be your biggest expense and therefore this should be the first question you try to answer.
The answer would depend on your programme type, duration, institution, country of study and currency exchange rates.
In most countries, programme fees charged by private universities, schools and polytechnics are higher than the fees charged by publicly-funded or government-funded institutions. This usually holds true for all students, irrespective of their citizenship status. In addition, ‘foreign’ students usually pay higher fees compared to ‘domestic’ students, irrespective of the institution.
Undergraduate courses last longer (3-4 years) all over the world, and therefore they tend to be more expensive overall than Postgraduate (1-2 years) courses. Nonetheless, there may be exceptions depending upon the type of course: specialist post-graduate medical or technical courses may cost as much or even more than 3- or 4-year undergraduate Arts or Commerce programmes. Doctorate (PhD) ‘courses’ may last anywhere from 3 to 7 years. Many are scholarship-based so the costs borne by the student – domestic or foreign – may not be very high compared to undergraduate programme costs. However, for international students who are self-funded, the cost of pursuing a PhD over 4 or more years may be comparable to the cost of a 4-year undergraduate degree.
Exchange rates vary across the world and developed countries like the USA, Canada, Germany, New Zealand, Singapore, South Korea and Australia enjoy far favourable rates compared to underdeveloped or developing countries such as India, Vietnam, Ghana, Brazil, Malaysia, Thailand, etc. If you are from a developing country and are planning to study in a developed country, the cost you incur will be greatly affected by the exchange rate.
This topic is best understood with an example:
The programme costs for a Malaysian self-funded student planning to pursue a 4-year undergraduate degree in electrical engineering at Stuttgart University (Germany) would depend on these factors:
- She is a foreign student from a developing country with a currency (Malaysian Ringgit) that’s weaker than the Euro.
- Stuttgart University has a good reputation for its engineering programme so its programme fees would be high, especially for foreign students.
- Across the world, fees for engineering programmes tend to be higher than Arts or Commerce programmes, and Stuttgart University’s programme is no exception.
- She is not on scholarship so she will have to pay the fees out of pocket for the full 4 years.
The story would be very different for an Australian scholarship student who applies for the PhD programme with the University of Sydney’s Department of Political Science:
- He is a domestic student with a scholarship, so his fees would be almost zero. Even if he was self-funded, his fees would still be quite low compared to a foreign self-funded student applying for the same programme.
- He pays in his own currency so exchange rate fluctuations don’t matter in his calculations.
- The Political Science programme falls under the Arts/Humanities umbrella so it is much cheaper than the Engineering programme.
In short, what you have to pay for your programme of study depends on who you are.
What Kind Of Financial Aid Is Available For International Students?
Education is a booming industry, especially in the developed world. Therefore education hotspots like USA, UK and Australia expend time, money and manpower resources to attract foreign students to their shores. This means that students aspiring to study abroad have plenty of options when it comes to financing their studies.
Some of the most common financial aid instruments available to international students are:
- University scholarships
- Government scholarships
- Scholarships granted by charitable institutions
Most universities offer grants, scholarships and fellowships to deserving domestic and foreign students. Many of these instruments are offered with no obligation to pay interest or even to repay the principal.
Many governments (Indonesia, Ghana, India, USA, etc) also offer repayment-free scholarships to citizens aspiring to study at a foreign university. However, there may be some other type of obligation attached to the instrument, such as a commitment to return to the home country to work for a certain period of time. These three sites offer useful information on scholarships worldwide.
Loans are different from grants or scholarships because a commitment to repay the borrowed money within a certain period is part of the loan agreement between borrower and lender. Loan terms vary by issuing institution, issuing country, loan amount, loan type and borrower’s profile.
The interest on bank loans tends to be higher than the interest on loans offered by governments or charitable institutions, and this is true in almost every country.
Banks in some countries like India offer specialised education loans with interest rates that are lower than the rates on personal loans. The repayment terms for an education loan also tend to be less stringent than the terms for a personal loan: longer repayment period, longer non-repayment holiday, interest discount for women students, etc.
Borrowers with a healthy credit history (and thus a good credit score) generally find it easier to get bank loans than borrowers with below-average credit scores.
You Might Also Want To Read: How To Improve Your Credit Score
In short, there are multiple avenues for financial aid. Do your homework and do it early!
Do I Need To Consider Any Other Costs?
Short answer: YES!
Long answer: Although the answers to Questions 1 & 2 provide a good impetus for the planning process, they don’t show the complete picture because studying abroad involves multiple costs in addition to programme fees. Any financial aid you get may or may not cover these other costs so you must be aware of them and develop effective strategies to finance them. These costs include:
- Pre-Departure Costs:
Add the following expenses to your budget so you can figure out how much you will need before you depart.
- Airfare & Other Travel Expenses: The cost of air travel varies between countries, routes and seasons. In general, the earlier you book your plane tickets, the more you can save on travel expenses. Consider buying travel insurance so you’ll be covered in case of unforeseen emergencies such as cancellations, loss of baggage or passport, accidents, etc
- Student Visa: Visa costs and processing timelines vary by country of application and country applied for. Make sure you budget for the application fee plus other immigration- or consular-related expenses such as biometrics (fingerprints, photographs), health checkups (mandatory in many countries), police verification, postage & handling, etc.
- Passport: If you don’t already have a passport, you must apply for one before you apply for your student visa. Processing times vary by country so you must start the application process as early as possible.
- Insurance: Student insurance is mandatory for international students in many countries such as New Zealand and Canada. Some universities include the cost of student insurance in the programme fees but many don’t. In this case, you will have to buy this separately.
- Preparation Expenses: If you are travelling to a completely unfamiliar country, you will incur preparation expenses for clothing, accessories, electronics, etc. They can add up if you’re not careful, so you must budget for these during the planning phase.
- Costs While Living Abroad:
- Living Expenses:
- Internet and mobile access
Living expenses vary between countries and even within countries. For example, if you’re a foreign student in the UK, your living expenses are likely to be lower if you study and live in Liverpool or Glasgow instead of London. Include these considerations when you prepare your budget.
You Might Also Want To Read: Top 5 Money Tips For Students Moving To The UK
- Academic Supplies (Books, Tools, Multimedia): These may or may not be included in the programme fees, so budgeting for this cost is also important.
- Emergency Cash: Many developed countries are becoming cashless so you may not need to hold a lot of hard cash. However, it’s still a good idea to put aside a stash for emergencies. If this is not possible, consider using a low-cost money transfer like InstaReM to access your money from home. With InstaReM’s zero-margin FX rates and low remittance fees, you can transfer money between a number of countries in Asia, Europe, North America and Oceania easily, quickly and with minimum hassle. Enjoy your study abroad experience and be free from the burden of financial worries with InstaReM.
During the planning process, you must research all the above expenses and prepare a budget. Remember to factor in your country’s inflation rate and possible exchange rate fluctuations in your plan. For your country, research past inflation and depreciation data and use this information to calculate the extra amount you need to arrange for (irrespective of whether it’s through your own funds or through a bank loan).
While planning, you will probably be better off if you expect higher costs and budget for extra, i.e. if you assume the worse-case scenarios and prepare accordingly. Remember – preparation is the key, not hope!
For the emergency cash, keep in mind these scenarios:
Best-case: You don’t need to add 1000 GBP to your emergency fund every month. Since it is meant for use in emergencies only, you can carry the unused amount forward. At the end of 12 months, if you have not spent it at all, you will still have a balance of 1000 GBP in your fund.
Worst-case: You may want to add 1000 GBP to your fund each month so that at the end of 12 months, you would have 12,000 GBP in the fund.
SECTION 2: FINANCIAL MANAGEMENT TIPS FOR YOUR STUDY ABROAD JOURNEY
What Are Some Important Financial Actions I Must Complete Before I Go?
Once you have a good idea of the type and scope of expenses you are likely to incur (See Section 1), you will be in a good position to take prudent financial actions before you go.
Here are a few you might want to add to your pre-departure checklist:
- Educate Yourself On The Currency Exchange Rates: You cannot avoid exchange rate fluctuations, but staying on top of them can help you manage your finances effectively in the new country. Download a currency-converter chart or install an app on your phone. These tools will be especially useful when you use an ATM or a remittance service like InstaReM to access your cash.
- Exchange Some Money Before You Leave: In addition to your emergency fund (which is meant for use after you arrive in your new country), carry a small amount of foreign exchange to cover you in case you run into any issues on arrival.
- Find A Job Before You Leave: In many countries, it is possible for students to work part-time to cover their expenses (depending on visa conditions). Look for a job before you leave and start applying as soon as you arrive. Don’t forget that most countries require a working tax number before you can be employed, hence, apply for this as early as possible.
- Open A Bank Account: Banks in many countries offer special savings accounts for students. Open an account before you leave so you can manage your money easily after you arrive. Make sure a free debit/ATM card is included in the service.
- Apply For A Low Or No-Fee Credit Card: For point of sale and online transactions, it is safer to carry and use a credit card instead of wads of cash. Also, if you pay by card in the local currency, you can avoid the hassle of getting your cash converted. You can also get better exchange rates and save on expensive Dynamic Currency Conversion (DCC) fees. A number of full-featured, zero transaction fee credit cards are available in many countries. Some of the best are:
- 28 Degrees Platinum Card – available in Australia
- Bankwest Zero Platinum – available in Australia
- Rogers Platinum MasterCard – available in Canada
- Halifax Clarity – available in the UK
- Aqua Reward Card – available in the UK
- Capital One QuickSilver – available in the USA
- Capital One Venture – available in the USA
- Chase Sapphire Preferred Card – available in the USA
- American Express Gold Card – available in the USA
You Might Also Like To Read: The Best Credit & Debit Cards For Overseas Travel
How Should I Manage My Finances Once I Am Abroad?
If you have commenced your study abroad adventure, congratulations! Now you need to make sure that you keep a prudent eye on your finances while you are there. Here are some useful tips to help you with this endeavour:
- Maintain A Budget & Stick To It: It is important to stick to your financial plan, especially if you don’t have a regular income (finding a job is not always easy) and depend on your savings from home. Also important, don’t touch your emergency fund unless absolutely necessary.
- Beware Of ATM Withdrawal Fees: Depending on the type of cash card you use and the bank it is drawn on, you may incur some fees every time you withdraw money from an ATM, especially if the ATM does not belong to the card-issuing bank. Try to withdraw money only from ATMs that are part of the Global ATM network and are situated inside the premises of banks rather than in stores or malls.
- Beware Of Dynamic Currency Conversion (DCC) Fees & Foreign Transaction Fees On Your Home Credit Card: For purchases, pack away your home credit card and use a local card instead. Many countries offer low-fee or no-fee options.
- Use A Specialised Remittance Service: If you do need to access money from home, avoid doing so through your bank. Banks charge hefty transaction fees which you can avoid by using a low-cost service like InstaReM instead.
- And Finally, Be Prepared To Make Some Sacrifices: Consider forgoing that night out or the branded ‘must-have’ sweater, if it doesn’t fit your budget. For now, focus on your studies. Luxuries can (and will) follow later!
We hope this article helps you achieve your dream of studying abroad. Even if planning for the financial aspects of this adventure seems overwhelming now, just keep an eye on the ultimate prize and know that the dream is well within your grasp!