Studying abroad: planning for a rupee that keeps falling

The goal is priced in someone else's currency

Most education plans start with a fee and an inflation rate. A plan for study abroad needs a third number, because the fee is set in dollars, pounds or euros and the savings are in rupees. Two things can push the rupee bill up at the same time: fees rising in their own currency, and the rupee buying less of that currency each year.

The child education calculator handles this with one input, the inflation rate. The trick is to choose that rate honestly: the rupee cost of a foreign course rises at roughly (1 + fee inflation abroad) × (1 + rupee depreciation) − 1. Three per cent of fee inflation and three per cent of depreciation is not 6% but 6.09% a year. Our earlier post on education cost inflation covers the fee side; this one is about the currency.

What the rupee has actually done

The site's currency converter keeps a daily history for 39 currencies. Here are the five most common study destinations, taken at calendar year-ends so that each point is a clean trading day.

Over nine years the rupee lost between 2.3% and 4.4% a year against each of them (the yearly change is a CAGR). The path was not smooth. Between the end of 2025 and 9 October 2026 alone, the dollar went up 7.7% against the rupee and the Australian dollar 12.3%. A plan cannot know which years will be the bad ones, so it has to assume a steady drift and keep some slack for a jump near the end.

A worked example

A family wants to fund a two-year master's in the US for a child who will need the money in 10 years. Today the course and living costs come to US$100,000 in total, which is ₹96.71 lakh at the rate of 9 October 2026. We assume fees and living costs rise 3% a year in dollars, so the bill in 10 years is about US$134,392. The monthly SIP is worked out the way the calculator does it: a 12% assumed return, contributions at the start of each month, 120 months.

Three per cent a year, close to what the dollar has done since 2016, adds a third to the goal. Leaving it out is the single largest error a study-abroad plan can make, bigger than getting the fee inflation slightly wrong.

To use the calculator, enter today's cost in rupees (₹96.71 lakh here) and set the inflation slider to the combined rate. At 3% fee inflation and 3% depreciation that is 6.09%; at 3% and 4% it is 7.12%. The SIP calculator will then show the same SIP growing forward, and a step-up SIP lowers the starting amount if income is expected to rise.

Three ways to soften the currency risk

1. Hold part of the corpus abroad. An overseas fund of funds invests in foreign markets, so its rupee value rises when the rupee falls. That is a partial hedge, not a perfect one: the foreign market can fall in the same year the rupee does, and the share of the corpus you hold there matters more than the fund you pick. Our guide to currency risk in international funds explains how much of a fund's return the rupee alone contributed, and the post on international funds and the rupee in 2026 puts numbers on this year. The tax treatment of these funds is different from domestic equity; international mutual funds sets it out.

2. Convert in tranches near the end. As with any education goal, the money should leave equity in the last few years, as our guide on investing for children's education describes. For a foreign goal, also spread the currency conversion over the final 12 to 24 months instead of buying all the dollars in one week. In 2026 a single year's move of 7.7% would have added about ₹13.5 lakh to the ₹1.75 crore bill above. Tranches do not avoid that drift, but they average it. The rupees waiting to be converted can sit in a liquid fund or a money market fund.

3. Price in the conversion spread. The calculator's rate is the mid-market rate. Banks, forex cards and remittance services add a margin, typically 1% to 3% depending on the provider and the currency. On ₹1.75 crore, 2% is ₹3.5 lakh. Compare providers before the first fee is due.

When the plan falls short

Most families will not find ₹75,000 a month at the start, and that is normal. An education loan is the usual bridge: the education loan EMI calculator shows the repayment, and the education loan and its tax deduction explains how the interest is treated. A plan that funds two-thirds of the cost and borrows the rest is still a plan. The mistake is to fund the course in today's rupees and discover the gap in the admission year.

The rule of thumb

• Price the goal in the foreign currency first, then convert at today's rate.
• Add fee inflation abroad and rupee depreciation together. A combined 6% to 7% a year for a dollar goal is a reasonable starting range given the last decade; it is an assumption, not a forecast.
• Revisit the currency assumption every year. If the rupee has run ahead of it, raise the SIP rather than hoping it reverses.

Past exchange rates do not predict future ones, and the 12% return used above is an assumption that no fund guarantees. The figures are illustrations of method, not a recommendation to buy any fund or currency.