Guest Column: Understanding cross-border education and its challenges

Cross-border education has gained substantial traction in India, driven by the interplay of globalisation and the perceived limitations of the domestic education system. Indian students seek international education to gain a competitive edge in the evolving global job market. This trend is particularly noticeable in states like Punjab, Andhra Pradesh, Telangana, Gujarat and Maharashtra.

According to the Union ministry of external affairs, the Government of India, over 1.3 million Indian students were enrolled in institutions across 79 countries in 2022. Popular destinations include the United Kingdom, the United States, Australia, Canada, Ireland, the United Arab Emirates and Germany.

The allure of studying abroad is underscored by the QS World University Rankings, where many top-tier universities are situated outside India. For example, in the 2023 QS Rankings, institutions like the Massachusetts Institute of Technology (MIT), Stanford University, and the University of Oxford occupy leading positions. In contrast, only a handful of Indian institutions, such as the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs), feature in the top 200, highlighting the disparity in global recognition.

Intense competition

While globalisation is a significant factor, challenges within the Indian education system also drive the trend of cross-border education. Despite improvements, the quality of education in many Indian universities remains inconsistent. Issues such as inadequate infrastructure, outdated curricula and limited research opportunities hamper the educational experience.

The rising costs, particularly in private universities, coupled with the unemployability of educated youth, compel students to seek better education and jobs elsewhere. The National Education Policy (NEP) 2020 aims to substantially improve the quality of education, but its long-term effects are yet to be seen.

Intense competition for limited seats in premier institutions like IITs and IIMs also forces many meritorious students to seek alternatives abroad. Funding an international education is a significant challenge, given the high tuition fees and living expenses.

Many students rely on education loans from banks and financial institutions. The Reserve Bank of India (RBI) reported a 15% increase in the disbursement of education loans for overseas studies in 2022, highlighting their importance. Scholarships and grants from foreign universities and governments, such as the Fulbright Scholarship (USA), Chevening Scholarship (UK), and DAAD Scholarship (Germany), are crucial in reducing the financial burden, though they are limited.

Countries like the USA, Canada and Australia allow international students to work part-time while studying. According to a 2020 survey by the Canadian Bureau for International Education (CBIE), 70% of international students in Canada engage in part-time work to support their living expenses. Some students turn to crowdfunding platforms and sponsorships to raise funds for their education. However, family funding remains the main source, with many families saving for years or liquidating assets to fund their children’s education abroad. In Punjab, selling land to send children abroad for education is quite common. Some of this practice is driven by the desire to prosper without merit, an aspiration of misguided youth that is often exploited by dubious emigration agents.

Third-party cross-border payment providers offer competitive exchange rates and lower fees, streamlining international education payments. However, regulatory challenges exist. Each country has its own set of rules and exchange rates, complicating cross-border transactions. Stricter requirements for verifying identities can cause delays and increase transaction costs. More standardised and cohesive approaches are needed to enhance the efficiency of cross-border payments.

India’s digital payment innovation, UPI, is gaining worldwide attention. The National Payments Corporation of India (NPCI) has implemented UPI in Singapore and France and has signed MOUs with 13 other countries, including Malaysia, Thailand and Japan. This will benefit Indian students studying in these countries.

Under the Liberalised Remittance Scheme (LRS), money remitted overseas for education attracts a Tax Collected at Source (TCS) at 5% if the amount exceeds ₹7 lakh. If the source of funding is an education loan, the TCS is 0.5% beyond the ₹7 lakh threshold. Understanding how TCS is applied differently for expenses is crucial for parents and students.

The risk of frauds

Cross-border transactions are more vulnerable to fraud due to the increased complexity of monitoring international transactions. For international students, this risk is particularly pertinent as they rely on money from home for essential expenses. Universities, financial institutions, and remittance providers must collaborate to implement robust authentication, encryption, and fraud detection mechanisms.

What next?

The exodus of youth represents a significant migration of intellectual talent seeking better educational opportunities. Some HR experts suggest that the government needs to evolve policies to transform this brain drain into brain gain.

The financial impact of youth going abroad is equally noteworthy. Estimates suggest that Indian students spend around US$15 billion annually on foreign education. The Reserve Bank of India (RBI) reported that a substantial portion of funds remitted abroad under the Liberalised Remittance Scheme is allocated for education purposes.

While globalisation offers better career prospects and cultural exposure, the inconsistencies and limitations within the Indian education system push students to seek superior opportunities abroad. The financial strategies adopted by these students reflect their determination and resourcefulness in overcoming economic barriers. As globalisation continues to shape educational aspirations, it is imperative for India to address its domestic educational challenges to retain talent and enhance the quality of its higher education system.