The Crossing: the money — how Indian families pay for a degree abroad
Part 3 of The Crossing. The tuition is often the cheaper half. Once living costs and a falling rupee are counted, a foreign degree can run past a crore — and how a family funds it shapes everything from the loan to the tax it pays on its own money.
A two-year master's at a well-known American university can cost an Indian family well over a crore of rupees once tuition, rent, food, insurance and flights are added up, and the steady slide of the rupee against the dollar quietly raises the bill every year. For most families the question is not whether the degree is worth it but how, precisely, to pay for something that costs more than a house. The answer is usually a combination of a loan, a remittance pipe with a tax attached, and a scramble for scholarships.
The size of the cheque
Sticker prices vary enormously by country. The United States and Australia sit at the costly end; the United Kingdom and Canada in the middle; and continental Europe far cheaper, with Germany charging no tuition at public universities. But tuition is only part of it. Living costs in London, Sydney or Boston can match or exceed the fees, and the family is paying all of it in a depreciating currency. Budgeting for a foreign degree means budgeting for the rupee's slide as much as for the university's invoice.
The education loan
The workhorse of Indian study-abroad financing is the education loan, from public-sector banks, private banks and a fast-growing set of non-bank lenders. Under the RBI framework there is no fixed upper limit on the loan amount, but for overseas study banks typically require the family to fund a margin of around 15% themselves, and to pledge collateral such as property for larger loans, generally above ₹7.5 lakh at public-sector banks. One feature is worth knowing: Section 80E of the Income Tax Act lets the borrower deduct the entire interest paid on an education loan from taxable income for up to eight years, which materially lowers the real cost of borrowing.
The LRS pipe
Money leaves India for fees and living costs through the Reserve Bank's Liberalised Remittance Scheme (LRS), which lets each resident individual send up to USD 250,000 abroad per financial year. The limit is per person, so parents and student each have their own, and a family can pool several limits to cover a large transfer in a single year.
The TCS most families miss
Layered on top of the LRS is Tax Collected at Source (TCS), and the rules changed in the family's favour in the 2025 budget. The threshold below which no TCS applies on education remittances was raised from ₹7 lakh to ₹10 lakh per financial year. Crucially, where the money is funded by a recognised education loan under Section 80E, no TCS is charged at all, whatever the amount. Where the family pays from its own savings, a concessional rate applies above ₹10 lakh, well below the 20% TCS that hits other overseas spending. And TCS is not a tax in itself: it is a credit, adjustable against the remitter's income-tax liability or refundable when the return is filed. Many families pay it without realising they can claim it back.
Proof of funds is a different test
Paying for the course and proving you can pay for it are two separate hurdles, and the second belongs to the visa. As Part 2 of this series set out, each country demands evidence of funds before it grants the visa: a Guaranteed Investment Certificate for Canada, a blocked bank account for Germany, around £1,529 a month in maintenance for a London student, and savings of roughly AUD 29,710 a year for Australia. A family can have the loan sanctioned and still stumble at the visa if the money is not parked in the right form, in the right name, for the required period.
The lever families underuse
The cheapest money is the money you do not have to repay. Merit scholarships, university bursaries and, above all, funded assistantships can transform the maths, and they are systematically underused by Indian applicants who assume they are out of reach. American PhD programmes in particular routinely waive tuition and pay a stipend in exchange for teaching or research; several governments and universities run scholarships aimed squarely at Indian students. Chasing these is slow, unglamorous work, and it is often worth more than any rate negotiation on a loan.
The bet underneath
Strip the financing down and a study-abroad loan is a wager: that the degree, plus the post-study work visa to stay long enough to earn in a hard currency, will repay the rupee debt with room to spare. That is why the financing decision cannot be separated from the country and visa decisions made earlier in this series. The family that borrows a crore to study somewhere with no realistic route to work afterwards has taken the same loan and made a far worse bet. The money is the part most families plan last. It deserves to be planned first.
Where to get it
A practical add-on to this guide. These are starting points, not endorsements — compare the terms, rates and fees yourself, and confirm the latest directly with each provider. Where Diaspora Dreams adds a partner link to a box like this, any commission comes at no extra cost to you and never shapes our reporting.
- Study-abroad education loans, including collateral-free options. International lenders such as Prodigy Finance and MPOWER Financing lend to Indian students without Indian collateral; domestic aggregators such as GyanDhan and Leap Finance compare offers across banks and NBFCs.
- Moving fees and living costs abroad. Before remitting a large sum, compare the exchange rate and charges on a specialist service such as Wise or BookMyForex against your bank's telegraphic-transfer rate. On a tuition-sized transfer the gap can run to tens of thousands of rupees.
- Scholarships and funding. Start with the university's own financial-aid office and government schemes; merit awards and assistantships are the cheapest money of all, as the guide above notes.
Continue the series · The Crossing
← Previous · Part 2
The visa
Next · Part 4 (coming soon)
The culture shock
