Falling rupee drives up costs for Indian students; Delhi makes the switch to four-year degrees
Can we be surprised that in a country of the size and importance of India that there is never any shortage of educational news? Its population of more than 1.2 billion people, representing over 17% of the global total, makes India the second-most populous country on earth. China is the most populous today but forecasts predict that India will take over the top spot by 2028. In parallel to these overarching trends, India also accounted for 11% of all global graduates in 2010, and is expected to overtake the United States and produce 12% of the share of graduates by the end of this decade. If current trends continue, China and India will account for 40% of all young people with a tertiary education in G20 and OECD countries by the year 2020, while the US and European Union countries will account for just over 25%. But perhaps the most compelling statistic of all for recruiters is that more than half of the Indian population is under the age of 25, and more than 65% is 35 or younger. With a demographic make-up so sharply skewed to school and college age, and with such a massive demand for education, many international recruiters closely follow developments with respect to Indian higher education reform, funding, and other key education issues. We will focus on two developments in particular in today’s post:
- first, how the depreciating value of the rupee is driving up the costs of study abroad for Indian students;
- second, the University of Delhi’s controversial move to a four-year undergraduate degree model.
The rupee slide
The Indian rupee (INR) has been falling in value since last year and is down just over 11% against the US dollar over the first six months of 2013, ranging from a low of 53.01 to a high of 60.73 over this period. Put another way, the rupee now buys 11% fewer US dollars than it did on 1 January and for students aiming to study abroad (and therefore needing to pay fees and living expenses in a foreign currency) this means that the real costs of their study programmes have increased by a corresponding amount. Education News provides a more concrete illustration of this currency effect in a recent post:
“Suppose a student plans to study at a US university and takes a loan from a bank. He estimates that he will need US $40,000 for his entire education. Let’s say, for example, that the exchange rate is Rs. 50 per dollar. Hence, he applies for [Rs. 2 million] as education loan. However, by the time he is about to pay the fee and go to the US, the exchange rate goes up to Rs. 55 per dollar. This means the cost of education is up by 10%. The student will now have to pay [Rs. 2.2 million]. His expenses just went up by [Rs. 200,000].”The Times of India
quotes two education consultants on how the currency slide is affecting the study abroad plans of Indian students:
- Educational consultant, Natasha Chopra says, "Due to rupee depreciation, students are reconsidering their decision to head for foreign destinations, especially the US, to study as both tuition fees and cost of living there will rise.”
- Another education consultant says students who have taken loans to fund their foreign degree are also going through a rough patch, "Education loans are usually in rupees, but as students pay their expenses in a foreign currency, the cost of education and stay has increased.''
In a related development, a recent study by Western Union found that more than 80% of international students would like to pay tuition in their home currency. A recent post in ScienceGuide sums up the key findings: “The study by Western Union shows that next to the courses that are being offered at a university, the financial aspects are most important to international students. The reason that so many students want to pay in their own currency is explained by an Indian student: ‘I don’t want to be unsure of exchange rate charged.’ A Chinese student adds that he would prefer a system of a better quality ‘to avoid the loss of money during the currency exchange’.” The growing recognition of this demand - and the competitive advantage it represents both for financial service companies and institutions - is in turn giving rise to new types of fund transfer services. These services, such as peerTransfer, allow students to pay international fees in their home currencies and to reduce the cost and currency exchange exposure in the process. See the video below to learn more. Some services, such as Western Union’s WU GlobalPay, appear to be explicitly targeting the Indian market. To the extent that such services deliver real value, and real savings, to incoming students, we may see more international fees transferred via such direct channels in the years ahead. ; How to make an international tuition payment via peerTransfer
The four year switch
While the rupee continues its precarious progress through 2013, the University of Delhi has embarked on a journey of its own with a move to a four-year model for undergraduate degrees. The new four-year structure will be introduced to 60,000 students beginning later this month, but speaking to Times Higher Education the University of Delhi Vice Chancellor Dinesh Singh notes:
“It would be a mistake to label the new structure as a four-year programme: In an attempt to take account of student diversity, it will have multiple exit points. Students leaving after two years will gain diplomas; those after three years full bachelor's degrees; and those who stay the four-year course (during which undergraduates will be required to conduct research) will gain advanced honours degrees. He said that the structure would shift away from India's traditional emphasis on examinations and towards credit for projects plus ‘skills-based, hands-on’ learning.”
Even though the move is not without precedent (as many as ten other Indian universities offer four-year degrees presently), the case of the University of Delhi appears to have spurred debate in India. Delhi is widely regarded as the country’s top university, and as University World News recently noted:
“The changes in Delhi University are widely seen as a testing ground for a general shift to four-year degrees in India.”
The issue has been widely debated in the Indian press and ongoing protests by academics and students have escalated all the way to the front door of the residence of Prime Minister Manmohan Singh (as shown). Proponents argue the new four-year model will make higher education in India more relevant and will provide students with the broader base of applied skills and knowledge that employers demand. Critics, meanwhile, insist that the implementation of the new programme structure has been rushed and may negatively impact the quality of education for undergraduate students. Times Higher Education has also reported on the critics’ view that, “The change represents the Americanisation of courses at the behest of a pro-business lobby. They also argue that poorer students, including those from historically disadvantaged castes, will be deterred from a costly extra year of study -- creating a ‘hierarchy’ of qualifications at the university.” A group of 40 parliamentarians recently appealed to Prime Minister Singh to postpone the implementation in favour of further study. However, the Ministry of Human Resource Development has indicated that the government will not block the university’s move, with Minister Shashi Tharoor noting in a recent online interview, “It is completely within the prerogative of the university to start a new course. It would be inappropriate to tell a vice chancellor what he should or should not be doing.” Barring a sudden shift in the political winds, the University of Delhi will proceed as planned with its introduction of a four-year degree option this month and it appears that this may indeed set the stage for a wider adoption of four-year degrees in Indian higher education.