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Sending Money to Students Abroad

Updated on May 09, 2019
Indian student studying

Annually, a few thousand Indian students go abroad to complete their higher education and the U.S has long been the most preferred destination. Even with tighter immigration rules, US colleges and universities continue to attract students from all over the world. The US universities consistently dominate the rankings, command a phenomenal international reputation, and provide opportunities to gain employment in the U.S or other countries.

According to the 2018 data released by the Institute of International Education (IIE) in collaboration with the US Department of State's Bureau of Educational and Cultural Affairs, 17.9% of the total foreign students in the US in 2017-18 were Indian students. A total of 196,271 Indian students, who contributed $7.5 billion towards the US economy, are the second highest group of foreign students in the US, next to the Chinese.

Once a student proceeds to the destination abroad, they will be expected to pay their tuition and living expenses. Some countries allow for the students to work part-time along with their studies to meet the cost of living in the designated area and most Indian students are supported by families.

For students receiving money from India, there are a few guidelines set by the Reserve Bank of India (RBI) under the Liberalised Remittance (LRS) Scheme, which all students studying abroad must abide by:.

1. Fee Remittance & Limits

The fee is generally paid to the foreign university directly before the student may embark on their travels. Under the Liberalised Remittance (LRS) Scheme, all resident individuals, including students, and minors are allowed to freely remit up to USD 250000 per financial year (April – March). The limit of US$ 250000 can be used in a single forex transaction or multiple forex transactions combined in a financial year. However, you can exceed the foreign exchange limit of USD 250000 under special circumstances.

1. Authorized Dealers (AD) Category I and II bank and may allow remittances without seeking prior approval of the Reserve Bank of India exceeding the LRS limit of USD 250000 based on the estimate received from the university/institution abroad.

2. For expenses abroad that exceed the LRS limit but are related to studies and medical treatment, an individual may be permitted to avail more foreign exchange than their limit of USD 250000 provided they produce the required document proof.

  • Medical expenses abroad – Estimate from the doctor in India or hospital/doctor abroad.
  • Study abroad – Estimate from university/institution for tuition fee (and or maintenance expense).

2. Remittance for Living Expenditure

Living expense of student studying abroad is also covered under LRS because it is an integral part of studying abroad. It is usually the case that the student is required to either live in a hostel (if the college or university has such facility) or at a rented accommodation, while the study is in progress, for at least for the first year. The overall limit of US $250000 is the same for any academic year.

3. Receiving money from your parents once you are in the foreign country

The government has given special status to the students who move out of India to study. These students are considered NRIs from the date they leave the Indian shores and do not have to wait to finish the 182 days abroad to be considered a non-resident. This revised rule has been helpful for students in opening bank accounts in the foreign country that their parents can use to send them funds. Through the NRI status, students can also open NRE and NRO accounts in India should they ever need to send money. You can read further on NRE/NRO accounts here.

How To Remit Money Abroad From India Under LRS

  1. Select a bank or RBI authorized dealers through whom you want to send money abroad. Select the one offering the best exchange rate.
  2. The bank account from which you are making the remittance should have been maintained for at least a year prior to the remittance. In the case of a new account, bank statements for the previous year or copies of the latest income tax assessment order or tax returns filed ought to be submitted.
  3. Submit A2 Form outlining the motive of your remittance.
  4. Submit the required KYC documents:
  • Passport copy of the sender
  • PAN Card copy
  • Beneficiary Passport Copy (if required)
  • Relationship Proof (if required)
  1. Transfer the funds to the account of the bank or the remittance service provider so that they can transfer the fund the beneficiary abroad.
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