Studying abroad is the dream of many an Indian student – and even more, perhaps, of their parents. Academic performance is the most important part of the process, followed by arranging for the funds necessary to pay for both the college fees as well as the cost of living of the person going abroad. This latter is particularly important, since developed countries typically have a much higher cost of living. Anyone who has paid fifty dollars for a haircut that costs fifty rupees in India would immediately attest to the truth of this statement.
But after everything else is in place comes the issue of making the actual payments abroad, or remittances, to use the more technical term.
Typically, the payment would be of two types:
- Payments to the University / College where the student will be pursuing the course
- Living expenses to be transferred from India to a personal Bank account opened by the student in the foreign country.
Further, the method of remittance would also depend on whether the student is funding his own education abroad out of accumulated savings, or whether the same is being paid for through a parent in India. Typically, after the student goes abroad, it is assumed that his family members in India would be administering his bank accounts anyway.
Universities would require the fees to be paid in tranches, typically at the beginning of every semester. This means that while the first instalment of fees would be paid before leaving India, subsequent ones would be paid after the student has left the country.
a. For the initial tuition fee payment, it is advisable to make an International Wire Transfer, which can be made through any Authorised Dealer Category – I Bank. Some Universities may insist on payment through a Demand Draft, which you will have to then physically mail to them; this is also available with most of the Banks mentioned in the list above.
b. You may also make the payment through Credit Card if the University offers the option. However, keep in mind that the charges are usually higher for a Credit Card usage than for a Wire Transfer, unless the amount involved is fairly low. Generally speaking, if you are being asked to send 500 dollars or less, you can use a credit card, but anything higher than that it would be advisable to opt for a Wire Transfer.
A student travelling abroad is allowed to carry upto three thousand dollars in cash and a total of ten thousand dollars overall, including travellers cheques or prepaid travel cards. For the initial expenses after landing, these funds will come in useful until the student is able to open and operate a bank account.
a. Once the Bank account is opened, the student’s parents can transfer funds to his account using the International Wire Transfer as mentioned in the previous section.
b. Alternately, if the student is using his own funds, the account would be converted to an NRO account at the time of departure from India, and the parent can operate the same if he / she is a joint holder or has a mandate to operate the account.
However, it is easier to transfer funds from a resident account for this purpose.
Subsequent tuition fee payments
After the student has settled in the foreign country, he may fund subsequent cost of education in many ways. To the extent that he still requires funds to be sent from India for this purpose, either of the options mentioned in the previous section may be used.
Keep in mind, however, that India is a country subject to exchange control regulations. Presently, a resident Indians may send upto USD 250,000 (or equivalent in other currencies) abroad for any permissible purpose under a scheme known as the LRS, or Liberalised Remittance Scheme. The limit is an annual limit (April 1 – March 31). Also, this limit is not exclusive to education, so if funds have already been sent for any other purpose by the remitter, the limit would be reduced to that extent. In case a higher amount is to be sent, the Bank can allow for the same provided you are able to provide documentary evidence such as a Fee schedule clearly showing the necessity for sending a higher amount.
When making a remittance, also keep in mind that:
- You are subject to multiple laws, of which the Foreign Exchange Management Act (FEMA) is only one.
- Ensure you fully discuss your remittance needs with your banker and
- Whatever you do, keep a margin of at least fifteen days from the last date of payment of fees before initiating the process. International remittances take time; upto 3 working days for even the most common currencies. Due to time zone differences and the plethora of laws affecting these products, the time taken for processing can also be longer than for an ordinary transaction.
With all these caveats, it must be added that the remittance for education is one of the most common and streamlined processes, and while you should pay due care to it, do not let it intimidate you – your priority is to study, not worry about the money!