In today’s increasingly competitive market, pursuing higher education has become essential for students seeking a successful career. For years, many students have chosen to study abroad, with the United States emerging as one of the most popular destinations due to its globally recognized universities. From the Massachusetts Institute of Technology (MIT), ranked at the top of the QS World University Rankings for 2025, to Harvard University, which consistently remains in the top 5, the US boasts numerous prestigious institutions such as Yale, Stanford, and Princeton.
However, gaining admission to these universities is neither easy nor affordable.The US education system, coupled with the rising cost of education loans, presents a financial challenge for many students. This raises the question: Is studying abroad, particularly in the US, the right choice when it comes to financial assistance? Before we answer this question, let’s see the value of 1 USD in INR in the last 5 years:
The following have been the value of 1 USD in comparison to INR in the last five years (2019-2024):
(Source: bankbazaar.com)
It is well-known that most students pursuing education abroad take out loans unless they secure scholarships. Typically, students apply for loans two to three months before their course begins. According to a report by The Economic Times, Indian students taking out education loans may face higher costs due to the rupee’s depreciation against the dollar, particularly with Donald Trump assuming office in the US.
Between January and July 2024, over 1.3 million students went abroad to study, suggest government data. The rupee’s depreciation, combined with uncertainties surrounding tariffs and interest rates, is expected to gradually increase education loan costs by 3-5% annually.
Furthermore, the Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, included several initiatives for the domestic education system, with an allocation of Rs. 1.48 lakh crore. However, a pressing question remains: Has studying abroad become more expensive with the new budget?
While the budget has been praised for the allocation to domestic higher education, it introduces a new challenge for students pursuing education abroad through changes in the Tax Collection at Source (TCS) provisions. TCS is a tax collected by sellers at the time of sale, and under the new budget, this impacts overseas education expenses.
For loans taken for international studies, the TCS rate will be nil for amounts up to Rs. 7 lakh. However, for expenses exceeding Rs. 7 lakh, a 0.5% TCS will apply. For students self-financing their education, the TCS rate is nil up to Rs. 7 lakh, but 5% will apply on amounts exceeding this threshold.
For example, if a student spends Rs. 10 lakh on education abroad, the TCS will be applicable only on the Rs. 3 lakh exceeding the Rs. 7 lakh limit. While this change may ease cash flow for employees through credit against TDS, it increases the financial burden on self-financed students pursuing higher education abroad.
