Shrinking ringgit puts parents, students abroad on edge

The slide of the ringgit to its lowest value since the 1998 financial crisis has had a significant impact on self-funding Malaysian students abroad.

Parents of tuition-paying students in the West have to fork out more than initially estimated as the difference between the values in currencies continues to increase. 

"The amount that you put aside in your mind has got to be increased by a lot more," said Tunku Ahmad Burhanuddin, who has two children currently studying abroad.

The retired fund manager has a child pursuing tertiary education in the US and another in Australia, studying Film and Sports Science respectively.

"As I no longer earn, everything that I have is what I put aside for them. At the moment it’s not exactly a burden in that way but it takes a lot.

"You’re not sure if you need to put extra into the pot but the fees are much higher in RM value. I’m not one with foreign income to counter that. I’m totally exposed to the RM depression, so yes it’s affecting me," said Ahmad.

The ringgit devaluation is taking a heavy toll on students bankrolling their own studies abroad, like Chen Shaua Fui who is pursuing her Master's degree at the Central European University at Budapest, Hungary and is financing her own studies.

Chen is funding her studies through a combination of her Employee Provident Fund savings and small loans and grants from family and friends.

She said that she was always prudent with her spending but since the exchange rate dropped substantially, she had been even more careful with her money.

"I felt that I was financially stable, but the rate is declining so much, and not knowing when it will be up again, I am beginning to fear that I might be short of funds by the end of the course," said Chen.

Analysts say the ringgit is likely to stabilise at RM4.50 to the greenback this year and only marginally improve next year.

Syafieq Yusoff, a senior-year Psychology major from Northern Illinois University (NIU) has one semester left before he graduates.

Syafieq says that his last semester will cost US$12,000 in tuition fees alone. He lives off-campus in a studio home unit, which he pays US$620 in rent each month.

This roughly comes up to RM53,700 per semester at prevailing exchange rates. It is about seven percent higher than at the exchange rate of RM4.18 to the dollar when Syafieq first started his degree in NIU in 2015.

“Yeah, we do talk about it. But I’ve always managed to spend less than my budget so it’s been okay,” says Syafieq when asked if the depreciating ringgit had an impact on his parents paying tuition or on his living expenses.

According to the Malaysian-American Commission on Educational Exchange (Macee), Malaysian students are typically only allowed to work on campus while studying. This restricts them from having a variety of opportunities to lighten their parents’ financial loads.

In contrast, students in the UK are able to take jobs either on or off-campus.

Farahani Wan Badrul Hisham, a Graphics and Media Design student from London College of Communication has worked three retail jobs since beginning her studies in the UK but this barely helps with expenses.

"(It doesn't help) that much I suppose, but it's good (that it) plays a part. It's extra pocket money."

Students in the UK have three terms per year (autumn, winter and spring), which they usually pay for in full around September.

Farahani paid 14,800 British pounds (about RM81,170) last year and she has two terms left before she graduates in the summer.

Luckilly for Farahani, the British pound held steady at around RM5.50 per pound last year devaluing in parts against the ringgit due to domestic factors.

According to the Institute of International Education, there are 56,260 Malaysian students abroad as at 2014, with 27.7 percent in the UK, 27.3 percent in Australia, and 11.5 percent in the US.

Ringgit devaluation had a severe impact in Malaysians studying abroad during the 1998 financial crisis.

Some 2,000 students were forced to abandon their studies abroad at the time as the value of the ringgit depreciated from RM2.50 to RM3.80 to the US dollar, USM associate professor Molly N N Lee said in an article on the impact of financial crisis on Malaysia’s higher education.

Australia also reported an 80 percent decrease in student visa applications from Malaysia between May 1997 to May 1998, she wrote.

The Malaysian student population in the UK also dropped from 18,000 in 1997 to 12,000 in 1998, she wrote.- Mkini