How Does INR Depreciation Impact Loan Repayment for International Stud -

Studying abroad is a dream for many students, but financing international education often requires student loans. One critical yet often overlooked factor in loan repayment is currency fluctuation—especially the depreciation of the Indian Rupee (INR) against stronger currencies like the US Dollar (USD), British Pound (GBP), or Euro (EUR). INR depreciation can significantly impact your loan repayment, increasing your financial burden over time.

In this article, we will cover:

What INR depreciation is and why it happens
How it affects education loan repayment
Strategies to minimize financial risks
How to use tools like an education loan calculator to plan effectively

Understanding INR Depreciation

What is INR Depreciation?

INR depreciation occurs when the value of the Indian Rupee falls relative to another currency. For example, if 1 USD = ₹75 today and changes to 1 USD = ₹80 in the future, the INR has depreciated.

Why Does INR Depreciate?

Several economic factors contribute to INR depreciation:

Inflation: Higher inflation in India compared to other economies weakens the INR.
Trade Deficit: When India imports more than it exports, the demand for foreign currency increases, leading to INR depreciation.
Global Market Uncertainty: Political instability, global recessions, and financial crises reduce foreign investments in India, causing the INR to weaken.
US Federal Reserve Policy: When the US raises interest rates, investors move their money to USD-based assets, leading to INR depreciation.

Example of INR Depreciation Impact:

In 2013, 1 USD = ₹55. In 2025, 1 USD = ₹86. This means that a student who took a ₹20 lakh loan in 2013 will need to repay a significantly higher amount in USD terms today.

How INR Depreciation Affects Loan Repayment

If you took an education loan in INR but are earning in a foreign currency, INR depreciation directly increases your EMI payments.

1. Increased Loan Repayment Amount

When the INR falls, you need more INR to pay the same amount in USD, increasing your EMI burden.

Example:

If your monthly EMI is $500 and the exchange rate is ₹75/USD, you need ₹37,500 to repay it.
If the INR depreciates to ₹85/USD, you now need ₹42,500 per month!

2. Higher Tuition and Living Costs

Many students take INR loans to pay tuition in USD. If the INR depreciates, the loan amount required increases automatically.

Tip: Use an online education loan calculator to estimate the total repayment cost under different exchange rates.

3. Longer Loan Tenure

A continuously depreciating INR can extend your repayment period, as you end up paying more over time.

Solution: Consider taking a loan in USD (or your study country’s currency) to avoid exchange rate risks.

How to Minimize the Impact of INR Depreciation

1. Choose the Right Loan Type: INR vs. USD Loan

If you plan to work abroad, taking a loan in USD (or the local currency) avoids exchange rate losses. If you plan to return to India, an INR loan is more practical.

Comparison: INR Loan vs. USD LoanFactorINR LoanUSD LoanExchange Rate RiskHigh (INR depreciation increases repayment amount)Low (No currency loss)Interest Rates10–14% (higher for unsecured loans)5–10% (lower for secured loans)Tax BenefitsYes (Under Section 80E)Yes (eligible for tax deduction)Repayment FlexibilityEMI in INREMI in USDProcessing TimeLonger (Indian banks require heavy paperwork)Faster (online process available)

Tip: If you’re studying in the US, UK, Canada, or Australia, consider USD-based loans from international lenders like Prodigy Finance to avoid INR risks.

2. Use Currency Hedging Strategies

Convert EMIs in Advance: If you expect INR depreciation, pay extra EMI in advance to reduce future repayment costs.
Use a Forward Contract: Lock in the current exchange rate using a forex contract with your bank.
Keep Savings in Foreign Currency: If you earn in USD, keep some savings in USD to pay future EMIs without worrying about INR fluctuations.

3. Compare Interest Rates and Use Loan Calculators

Before applying for a loan, use an:

Education loan calculator to estimate different repayment scenarios.
Loan eligibility calculator to check which loan type suits you best.
International student loan calculator to determine EMI payments in different currencies.

Try an Online Education Loan Calculator to Plan Your Repayments Smartly!

Conclusion: Plan Smart, Repay Wisely

Choosing the right education loan is crucial for effective financial management. Compare INR and USD loans, use loan calculators to estimate repayments, and develop a repayment strategy to minimize risks. With careful financial planning, you can focus on your studies without unnecessary stress.