To tide over fund crunch, students are either looking at alternative sources of funding like scholarships or picking up part-time jobs.

Nayan Upadhyay of Mumbai is hoping the New Year will bring some cheer for the depreciating rupee. Upadhyay, who wishes to pursue a Masters course in International Business, is suddenly feeling the heat.

"The way rupee is behaving, I am wondering if I will have to shelve my study plans and take up a job. The depreciation has already pushed my course fee up by 18 per cent. This is in addition to the living expenses," he says.

Upadhyay's course for 21 months begins in April 2012. He will have to shell out a total of Rs 34.2 lakh for the course -- Rs 23 lakh for tuition fee and Rs 11.14 lakh towards living expenses. Had Upadhyay sought admission in 2011, he would have saved over Rs 5.38 lakh.

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In the past one year, rupee has depreciated over 18 per cent. In January 2011, rupee was at 44.72. It ended the year at a low of 53.07.

The increase in study cost is directly proportional to the percentage of rupee depreciation. Also, rising cost of buying US dollars (plus a 2 per cent bank rate on the rise), increases the cost Indian students have to shell out for studying abroad.

This means that even if the bank sanctions, say about Rs 15 lakh loan now, it would yield only about $28,000, which otherwise would have yielded over $33,000.

Thus, the students have to look for additional sources of finance to gather almost 20 per cent more money.

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"There are many deserving and worthy candidates from humble background who apply for higher studies abroad. For them, arranging the funds is not an easy task despite their strong academic records and the availability of over 50 scholarships. The weak rupee has resulted in higher cost of financing, and some families have indeed seen their savings fall short and their dreams of a better future shattered," said Mohit Gundecha, CEO, YourNextLeap.com, a Pune-based online career and academic counsellor.

Indian Banks generally put a cap on providing education loans for higher studies abroad, and this ranges between Rs 15 and 20 lakh.

Owing to the current rupee downfall, this disbursed amount would be insufficient for MS aspirants.

To tide over this fund crunch, say overseas education consultants, students are either looking at alternative sources of funding like scholarships or picking on campus part-time jobs, etc.

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For many who are not able to arrange for either, waiting for the rupee to cool off is the only option.

Vinayak Kamat of Gee Bee World, a Mumbai-based overseas education consultancy, says students who are solely relying on bank loan and then working back in India on starting level salaried jobs will be worst affected.

A Krishna Kumar, managing director (national banking group), State Bank of India, says the impact of depreciation in rupee value will not be seen in the current year but it will do so in the next academic year. Banks will work out cost economics in March-April this year.

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Education loan growth slows

Rupee's depreciation coupled with the uncertainty in the global economy may have also led to a slower growth of education loans.

"Global uncertainty, which has probably played on the minds of risk managers at banks, could have led to slow growth in education loans. They may now perceive higher risks for students, as far as job potential is concerned," said Prashant Bhonsle, country head, Credila Financial Services, an HDFC Ltd venture.

Data from the Reserve Bank of India shows that year-on-year rate of disbursals of education loans grew only 17 per cent in October, against 24 per cent in October 2010.

Credila, however, says Bhonsle has experienced more than two-and-half-times surge in applications in the last two months over the corresponding period last year. Credila offers education loans for over Rs 20 lakh.

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The value of loans for overseas studies is higher (above 7.5 lakh), and hence banks take collateral for security.

Currently, loans up to Rs 4 lakh do not require any collateral, and loans up to Rs 7 lakh require a third-party guarantee.

The education loan business is in direct co-relation with the education sector. How the sector evolves -- the potential employability and the courses being launched -- has an impact on repayments and risk perception of people who lend to students.

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As the sector is evolving fast, it makes the domain challenging for lenders like banks, where research done on the sector is minimal.

Also, thanks to higher interest rates, many people are using their own savings, rather than taking education loans.

"With the rupee depreciating, foreign education would become more expensive, and this might reduce the offtake of education loans further, as people may go for higher education in India," said M Narendra, chairman and managing director, Indian Overseas Bank.