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What's your foreign degree worth?

Indian students are spending Rs 15-50 lakh on a foreign degree. But Western economies and the Indian job market have both changed.

ET Bureau|
Updated: Nov 21, 2011, 06.11 PM IST
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What's your foreign degree worth?
When 23-year-old Saurav Roy (name changed) decided to join a three-year IT engineering course at an Australian university in 2006, he did so at a seemingly opportune time. The Indian economy was booming and jobs seemed plentiful.

There were hundreds of other Indian students like him, headed to countries like Australia, whose colleges seemed far easier to get into, than their counterparts in the United States or the United Kingdom, the traditional study destinations for most Indians looking for that coveted foreign degree.

As is the case with many foreign universities now, the first year of education was spent in India with classes conducted through a partner institution of the university in Kolkata, where he lived. But it was when Roy reached Adelaide in 2007 to begin the second year that his troubles began.

Accommodation was difficult to find and it turned out to be expensive, he finally ended up sharing a flat with another Indian and two local boys. The Indian boys didn’t get along well with the locals with disputes about the sharing of bills.

“And though the students had the permission to work 20 hours a week on or off campus, jobs were difficult to come by,” says Roy. Being a talented musician, he worked at a local music studio in Adelaide on part-time basis. That was a job he enjoyed and it earned him some money as well.

It was in the midst of this that the newspapers began to fill with headlines about violence against Indian students in Australia. Roy had a small taste of this, he claims that the parents of one of the local boys he shared a flat with, threatened him. Scared, he returned to India and told his mother, who had raised a Rs 20-lakh loan to finance his study abroad, that he would not go back.

So after two wasted years, Roy returned to India for good in 2008, just as the global economic crisis took hold and job markets around the globe tanked. The credits he earned in Australia could not be transferred to any college here and he has now enrolled afresh in a management course through correspondence at a college in India.

What's your foreign degree worth?

Kolkata Isn’t Adelaide

Roy’s bad experience is not necessarily the norm. Few students face such severe adjustment problems that they have to return without finishing their course. And while attacks did take place against some Indian students in Australia, they were never very large in number and have declined.

But it is Roy’s expectations about his education, and how they ran up against reality that is perhaps a bigger cautionary tale. When beginning his course, Roy was told that along with his engineering degree, he would also be able to take courses in management, thus enabling him to earn an MBA-cum-engineering qualification. But he found the infrastructure in the affiliate in Kolkata quite poor.

“We found that the management modules promised were not available,” says Roy. “We were encouraged, at least initially, to take only technical courses.” He says there was an improvement in the quality of instruction only when he began taking courses directly with the university rather than with the affiliate. But that happened only a year-and-a-half into his course of study. At the end of it all, students like Roy, and their parents, must contemplate that most uncomfortable of questions: was all that money worth it?

The Middle-class Dream

For decades, the foreign degree has been a great Indian middle-class dream, a way to not just get an excellent education, but also a fast track to emigrate to the West. In many countries, immigration rules were structured to allow Indian students, once they graduated, to work for a couple of years. Students would use that option to settle for a longer time, perhaps permanently.

If permanent resident status in the US or UK or Canada was the ‘pull’ factor, the ‘push’ came from the class system in Indian higher education. The top-flight institutions, the IITs, the IIMs, and a handful of other top liberal arts and technical colleges were far too few in number to be able to absorb the enormous number of students looking for a good degree, that would get them that extra edge, that second look from a recruiter overwhelmed with CVs, in a hugely competitive job market.

What's your foreign degree worth?

As researcher Craig Jeffrey, a lecturer at the University of Oxford, documents, in his study of the state of higher education in Meerut, there are youths who accumulate degree after degree, without any hope of getting a job. He visited Meerut twice, in 1996 and 2004.

What's your foreign degree worth?
“Between 1996 and 2004 I had completed my PhD, married, and obtained an academic job,” says Jeffrey in a paper he wrote on the unemployed permanent students of Meerut. “During the same period, many of my informants, now in their mid-30s, had, it seemed, stood still. Unable to obtain salaried employment, one of these students asked me: What can we do but study and wait?”

That pressure on the Indian education system will only get worse. According to United Nations Population projections, the population aged between 15 years and 24 years will rise from an estimated 241 million in 2015 to 248 million by 2030.

The huge excess demand for education has led to all sorts of perverse outcomes in India, such as the requirement that students post a 100% mark to be able to get admission into the coveted BCom (honours) courses in Delhi University (DU). Indeed a few months back, newspapers ran stories of students who had been accepted to top Ivy League colleges in the US such as Cornell and Dartmouth after being rejected for admission to DU.

The Boom Decade

Unsurprisingly, the global mobility of Indian students increased phenomenally over the past decade. Indian students to the US (the destination of choice for most), increased from 54,000 in 2000-01 to 1,04,000 in 2010-11, according to the Open Doors report, which is published annually by the Institute of International Education (IIE) in partnership with the US State Department’s Bureau of Educational & Cultural Affairs.

Students from India still form about 14% of all international students in the US and are second only to the Chinese. A total of 2,18,000 Indian students were studying in the US, UK, Canada and Australia as of 2009-10.

Many students are now heading overseas for an undergraduate degree, something that used to be out of the reach of most, except the very rich. “A new trend is that increasing numbers of talented young high-school students who are not sure what they want to do the rest of their lives, and wish to explore different options before committing to a major, go as ‘undecided’ freshmen,” says Renuka Raja Rao, country co-ordinator, educational advising services, US-India Educational Foundation.

According to Open Doors, 14.5% of Indian students in the US are now undergraduates. If Indian students are heading abroad in droves, the higher education systems overseas, battered by budget cuts, welcome them with open arms.

International students contribute more than $21 billion to the US economy, through their expenditure on tuition and living expenses, according to the US Department of Commerce. Higher education is among the US’ top service sector exports. The Australian economy is even more dependent on the international educational industry, education is the largest services export sector, contributing $17.7 billion to the Australian economy in 2010.

In 2008, international students in Canada spent in excess of $6.5 billion on tuition, accommodation and discretionary spending; in the UK, a research paper from the department for business innovation and skills in June 2011 estimated the total value of UK education and training exports to the economy at £14 billion, with a projection that this could rise as high as £26 billion by 2025.

But despite this happy coincidence of increased supply meeting increased demand, the trend in student numbers to these countries from India has actually been downward. The US has seen a marginal decline of 1% in student inflow over the last academic year. Between 2008 and 2010, the number of student visas to Indians in Australia declined by 38%, and for the UK, the number declined by 27% in just one year. Canada by contrast, saw an almost four-fold jump between 2008 and 2010.

Three Categories

There are roughly three categories of Indian students who are looking at foreign degrees, points out Bharat Gulia, senior manager, Ernst & Young, a leading consultancy. The top layer of Indian students from the best colleges such as the IITs usually get admissions in the best institutions overseas and some of them also get good funding for their education. Top MBA courses are included in this segment and there’s no drop in interest for them.

Manisha Malhotra | 23 years
(Name changed on request)

Overseas Course: After a BA Economics from Delhi University, in 2009 went for a 10-month marketing course +2-5 month internship at ESADE business school in Spain

Amount Spent: Around Rs 18-20 lakh

Return on Investment

Negative: She did not want to come back to India as she thought that Indian firms wouldn’t know much about the degree and it was difficult to break into the FMCG sector. She tried looking for a job in Europe but had problems as the student visa became invalid after her course. In Spain, the employer is required to prove that no Spanish national is available for the job before hiring a foreigner. Back in India, it was very difficult to get a job, she had to do two internships for 4 months and cold email many recruiters. Finally, she joined a media planning firm.

Positive: Despite the struggle afterwards, the education quality was brilliant.

There’s another section of young students who look at overseas options when they fail to get admissions in the top colleges in India. They are mostly from affluent families and are going overseas for undergraduate degrees.

Finally, there are the students from small towns in states like Punjab and Andhra Pradesh who are looking at overseas education as a quick fix to immigration. These students often get duped by unscrupulous agents and service providers and their numbers have been falling in the past couple of years.

While data are not available about the pattern of intake of foreign students, it’s highly likely that the boom in foreign students overseas in the past few years, and even accounting for the recent drop in numbers since 2008, is driven by the last two segments. The top universities in the US, even those outside the Ivy League, or the Oxbridge universities in the UK are far too small and selective to have a significant impact on overall student visa numbers.

All segments of students will be hit by changes in immigration policy, such as those that have hit international students in the UK. But it is the last two segments of students who will be most hit by the other trends affecting foreign student flows, weak job markets, and a crackdown on ‘fraud’ universities.

The Big Squeeze

Twenty-eight-year old Aman Dhall decided to head to the UK after five years of working in India. His course? An MSc in sports management at Loughborough University. Dhall decided on the course after looking around and finding no institution of comparable quality which offered a similar course in India.

“I had planned to work abroad for two years before coming back to India,” says Dhall. But despite having worked on several projects abroad, he didn’t get a job. He is back in India and has set up his own venture, after teaching sports marketing at Khalsa College and working on a project with a sports and development NGO.

Dhall’s experience is not unique. The UK has tightened rules for international students including curbing the opportunities to work during study and bring in family members. Further, international graduates are no longer allowed leave to stay in the UK for two years after their course, to look for a job. They will have to secure a skilled job with a sponsor, to continue to remain in the UK.

Arjun Jassal | 27 years
(Name changed on request)

Year & Course: After working for two years in India, in 2008-09 went to LSE for MSc in communication, information and society (research)

Amount Spent: Around Rs 15 lakh

Return on Investment

Negative: Took a while to get a job in London, had to do paid internships for 4-6 months but eventually worked in a venture capital firm in London for about two years.

Positive: The course was an amazing learning experience and there was no comparable course on the sociology of media or sociology of technology in India. He decided to move back to India as the economy was growing and has started his own company here.

Under new language requirements, students who cannot speak English will be refused entry. And very recently, the UK Border Agency has also created a list of more than 2,000 Indian banks and financial institutions from which it will no longer accept evidence to show that a student has sufficient funds to support himself and pay for his course.

These drastic changes will have a huge fall-out on the international student numbers in the UK. And finally, joblessness among young people in the UK is now above 1 million for the first time since 1992, making it politically extremely unlikely, if not impossible, that this tight policy will be reversed anytime soon.

On the Immigration Route

The fall in Australian student visas reflects a tightening of that country’s immigration policy as well, after a series of steps to tighten norms for international education service providers and student visas following the spate of racist attacks on Indian students in 2009.

But Australia has now announced a rollback. Recent visa changes that came into effect early this month means that Indian students going to Australia will have to demonstrate less funding. Further, Australia is offering a two to four-year post-study work period for university degree graduates which is not linked to any skills occupation list.

“Following the racist attacks in Australia and the revamp of the system initiated by the government which followed, there’s a clear change in perception when choosing Australia among Indians,” says Ravi Lochan Singh, managing director of education consultant Global Reach.

“The recently introduced post-study work route will help graduating students remain in Australia and if they find jobs they will gain valuable international work experience and can recover some of the money they spent on studying overseas.”

Canada too has liberalised immigration policy. With the creation of the Canadian Experience Class in 2008, eligible foreign students can apply for permanent residency from within Canada, and they now effectively have a couple of years advantage over others applying for permanent-resident status.

Few Jobs, Many Frauds

The US has not changed its immigration policy too much over the past couple of years. And in fact an Indian student in the US can get a work permit (the coveted H-1B visa) far more easily now than before. Earlier, the H-1B quota of visas used to be filled within the day applications were opened. Now months can pass, and H-1B visas are still available. But that unfilled quota in H-1B visas is because of a weak economy and job market, with unemployment in the US running at 9%.

Akash Sharma | 32 years
(Name changed on request)

Year & Course: After working for 10 years in India as an art editor, he went to London College of Fashion for a masters in fashion photography in 2008.

Amount Spent: Was planning to spend Rs 30 lakh but changed his course and saved most of it

Return on Investment

Negative: A week into the course, he realised that the standard of education didn’t match up to his expectations of a foreign course. He then withdrew from the earlier course and changed to a one-month programme in advanced image editing as he had already invested some money in the college and so couldn’t come back immediately. For someone with experience, he felt that the course was a waste as he’d already been exposed to most of the technologies and software being taught there. On coming back, he joined his previous employer and so he feels there was no positive return on his investments.

And in a weak job market, employers have become more discriminating. Vikram Bhardwaj, chief executive of Redileon, an executive search firm, with offices in North America and India, is actually optimistic. “Despite the weak economic environment, there are jobs to be had and that is a fact.

However, employers are far more selective now than ever before. For instance, when they hire an MBA graduate, they will look to see if the candidate has a strong sub-domain learning, expertise or specialisation in either of the core disciplines of finance, marketing or HR. Mere specialisations don’t guarantee you a job.”

“Given the low morale in some important sectors such as financial services in the US, Indian students should start looking out for internships right after they finish their first year studies so that they can build up good networks,” says Robinder Sachdev, president of think tank Imagindia Institute and India director of the US India Political Action Committee.

“While there are many cases of Indian students coming back to India a few months into the optional practical training period [the 1-2 years that they have in hand to search for a job], there are some sectors where there are jobs to be found,” he says, pointing to some recovery in IT, and increased opportunities for students in sectors such as oil and gas. “American companies which are looking to aggressively tap global markets are recruiting international students in a big way.”

Irrespective of these opportunities though, students are heading back from overseas in larger numbers. Says Sangeeta Singh, partner, human resources, in KPMG, a consultancy: “Over the past few years, I have seen a larger number of students from overseas writing to us about available opportunities.”

Added to employer selectivity, and a weak job market, is the fact that governments, quite apart from immigration policy are extending the crackdown on what they perceive as fly-by-night operators in the education market. US authorities, for instance, cracked down on the Tri-Valley and Northern Virginia universities.

In Australia too, the government has been on a cleaning-up operation of bogus private colleges. The UK Border Agency has set up a ‘trusted institutions’ list and only colleges on that list can enrol foreign students (see box Be Careful of Fraudsters). Say you’ve studied in the US or UK and have decided to head back (perhaps because you have to). Surely that foreign degree should give you a competitive edge here?

Foreign Degree, So What?

An education adviser who travels across India to advise students on studying in the US points to a big difference in perception between the metro cities and the tier II cities. “There are a lot of moneyed people in tier II cities who simply want to send their kids abroad and they are less discriminating about where their kids end up,” he says.

“On the other hand, in the metros, there are many parents who start out with the idea that they have a crore to spend and want to send their kid to MIT or Harvard. That’s simply not going to happen.”

If an encounter with the overseas admissions process can shatter many illusions, there is little joy when students return from overseas to face the hard realities of the Indian job market. If you expected that degree from Timbuktoo university to have employers falling over you, simply because it was earned in the US, forget it.

KPMG’s Singh says that outside of a few blue-blooded colleges, she gives little importance to the mere existence of a foreign degree. “We don’t give any added weightage to a foreign degree,” she says. There is a further problem.

“A lot of people who come back from overseas have unrealistic expectations about compensation,” she adds. “The days when Indian employers used to be fascinated with a foreign degree are gone,” says Shiv Agrawal, of ABC Consultants, an HR company. “Employers are now far more focused on the quality of the degree and the institution.”

And forget about being paid more for doing the same job as others, simply because you have a foreign degree. “That’s quite rare,” says Agrawal. “What might happen is that a foreign-degree holder, if they are seen as qualified enough, might be recruited at a more senior position.”

Pallab Bandyopadhyay, director, human resources at Citrix Systems, agrees that employers are now less enamoured of the mere fact of a foreign degree. “If you have a degree from a mid-tier college or below, then you have to think hard about whether the return justifies the investment,” he says.

Time for a Rethink

Students go abroad for roughly two reasons. One, it’s seen as a fast track to eventually settling overseas. Countries in the West facilitated this by allowing a student to finish their education and then continue working there for a set period of time, say, two years.

Because of the way the immigration process worked, students who studied in countries such as the US, Canada or Australia, effectively had, in most cases, an advantage over others who had never studied abroad but had directly applied to work in those countries. The second reason was that the quality of the foreign degree (in theory) would provide a big competitive edge in the Indian market, if the student chose to, or had to, return.

The second of those assumptions is certainly not true anymore, especially if you’ve not studied at what Indian employers perceive is a top-class university. The first of those assumptions while not wrong, is certainly being tested in the current climate of weak job markets, and stronger immigration controls in some countries.

“With the economic uncertainty, the pay-off potential of foreign degree is being questioned by some Indian students,” says Rahul Choudaha, director at World Education Services, a New York-based nonprofit organisation that specialises in international education trends.

“The majority of the students, irrespective of immigration intent, want to work for a few years abroad to not only recover the investments but also gain foreign work experience. With increasing net of cost of education and decreasing work opportunities, it will take longer time for recouping the investment,” he says. But he remains bullish. “However, there is no doubt that value of good foreign education still deserves the investment.”

Net Gain or Pain

Indeed, it’s not all bad. “My advice to students in the US right now is to stay back and continue to look for work rather than being disheartened and returning immediately after the course of study,” says Redileon’s Bhardwaj.

“They should take full advantage of the fact that they are allowed to stay in the US for some time after graduation, and should use that time to position themselves in the job market and look for opportunities.”
Back to the original question: is all that investment in time and money justified?

Even those for whom the reality fell short of their expectations, often have, at worst, mixed feelings and few regrets. “It was a great experience, and on balance, I still think it was worth it,” says Dhall. But with the cost of a foreign degree running at Rs 15-20 lakh a year, and the increased uncertainty over the end result, this is a question parents and students will increasingly ask themselves.

Be Careful of Fraudsters

Thousands of Indian students were victims of the Tri-Valley & University of Northern Virginia immigration scams in the US. Authorities warn against lack of attendance at colleges and unauthorised employment.

The department of homeland security has many more institutions under the scanner for fraudulent practices.

UK has announced a new most-trusted institutions list for its Tier 4 student visa system. To gain entry into the UK, students need to be enrolled only in institutions included in the list.

11,000 foreign students have been barred from entering Britain after their college courses were exposed as bogus. More than 450 colleges have lost licences.

Australia has cracked down on bogus private colleges, many of which were fronts for immigration scams involving international students. Indian students enrolled in these institutions had to come back.

What's your foreign degree worth?

(Additional reporting by Mishita Mehra)

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