Weak dollar hurts students abroad
December 8, 2007
The falling exchange rate of the US dollar makes it increasingly difficult for College students studying abroad
p. In a place where a 10-pack of chedder cheese costs over $6 (£3), Oxford grad student Joanna Greer ’07 has trouble staying on her self-imposed $10 a day budget.
p. In England, where Greer studies, the sterling is currently worth more than twice the dollar, at a rate of $1 to £2.026, according to Yahoo! Finance.
p. “It hurts,” she said when asked about Britain’s strong sterling, the United States’s ever-weakening dollar and what she does — besides starve — to avoid debt. “There comes a certain point at which you can become repulsed by pasta, I’ve reached that point. And it’s not like they have hot pockets here.”
p. Greer, who is from Radford, Va., is one among hundreds of thousands of American college students who seek some or all of their degree outside the United States, and while that number continues to grow annually, students face an ever-increasing financial worry: the foreign exchange rate.
p. The United States has always been the world-leading exporter of study abroad students. According to a 2007 report by the Institute for International Education, over 220,000 American students studied in a foreign country in 2005-2006, with most studying in, you guessed it, England.
p. Yet, as the dollar continues its seven-year slide toward irrelevance (since 2001, according to George Mason University economics professor Tyler Cowen, the dollar has fallen 19.8 percent), College students who study abroad are growing more and more cautious of how — and where — they spend their money.
p. In an interview with The Flat Hat, Cowen said he did not think students would be severely affected by the exchange rates, saying that the burden of the weakened dollar would be transferred to the study programs, not the individual students.
p. “I am not sure the effect [on students] will be large,” Cowen said, “because the schools in question already make profits on these programs and higher costs might lower the profits of the school without much affecting what the student pays upfront.”
p. Enu Herzberg ’09 currently studies at the London School of Economics and lives in central London, ranked by The Times of London as the world’s second-most expensive place to live (behind Moscow). Herzberg said that gaining an understanding of London’s local economy was vital for his budget.
p. “The key to getting by is understanding where you live and what’s relatively cheap in the area,” Herzberg said. “For instance, concerns over mad cow and hoof and mouth disease drive meat prices through the roof here, while dairy and produce are pretty cheap. That translates to plenty of egg and cheese sandwiches and salad for me.”
p. Herzberg also decides his spending by comparing prices for different goods, like the value of restaurant food versus cheap, intercontinental air flights.
p. “I rarely eat out because … who wants to spend £11 ($22) on a burger when for £18 ($36), you can fly to Italy?” he said. “I guess that would be my most major adjustment, I equate large expenditures in terms of traveling because flying across Europe is so cheap.”
p. It’s not only the pound that trounces the dollar’s value. Since its inauguration in 1999, the Euro has steadily gained against the dollar, and is currently trading at record highs. Its current value, according to Yahoo! Finance, is $1.4619.
p. Sarah Nolan ’09 who is studying in Seville, Spain this fall, said that due to the weak dollar, she has avoided shopping this semester.
p. “Spaniards have beautiful shoes, but I don’t buy them because I would have to multiply by 1.5.”
p. Spain’s prices are relatively cheap compared to England’s. Nolan said that a pint of beer, a popular spending item for most College students, costs about €4 ($6) in Seville, as opposed to £4 ($8) in London.
p. Nolan, who is from Fairfax, Va., has also taken advantage of the College’s tuition exchange program, where she continues to pay in-state tuition while abroad. In fact, if out-of-state students study abroad at many of the College’s faculty-assisted programs, they too pay in-state tuition rates, a difference of more than $5,000.
p. Though the dollar is still declining — and may continue to — against the pound and the Euro, it does not necessarily mean Americans will study abroad less. Cowen recently wrote in the Dec. 2 edition of The New York Times that the falling dollar may signify that Americans will spend money where prices are cheaper, such as Asia or South America.
p. “Many observers have an exaggerated sensitivity to the dollar’s fall because they spend more time in relatively expensive countries,” Cowen wrote. A shopping trip to London will give an American tourist the feeling that all prices have doubled or even worse. A weekend vacation or conference in nearby Toronto or Montreal may no longer feel like a bargain.”
p. Nevertheless, Cowen notes, good prices exist in the world, just not in Western Europe.
p. “There are still many bargains, travel and otherwise, in Asia and Latin America for people paying in dollars,” he said.
p. More College students may seek other continents such as Asia, Africa or South America for their abroad experience, gaining new insights into non-western cultures — and saving thousands of dollars while doing it.
p. Amir Louka ’09, who is currently studying at the American University in Cairo, Egypt, said that his costs are minimal in comparison to Americans in Europe.
p. “A large percentage of the population [in the Middle and Far East] manages to survive on less than a dollar per day, so a little definitely goes a long way [in Egypt],” Louka said. “Unfortunately, because everything is so cheap the temptation to spend money has been hard to resist. Far too many times per day I find myself saying ‘Wow that only costs a dollar, I’ll take two.””
p. Louka also said that — regardless of price — the study abroad experience is too unique to pass up.
p. “This is the epitome of that fabled ‘once in a lifetime experience,’” he said. “And [its] worth every penny, no matter how worthless those pennies are becoming.”