Transferring Large Sums Of Money As Students To Pay For Tuition And Living: How To Do This Right

Price discrimination laws are what prevent a shop seller from charging two different customers two different prices for the same can of coke. Unfortunately, these laws go out the window when it comes to education and tuition for foreigners.

If we take the UK as an example, the government has capped annual tuition fees at £9,250 for residents of the UK. It doesn’t matter if it’s an ex-polytechnic university or Oxford, it’s £9,250. For overseas students, however, you’re looking at between £28,950 and £44,240 per year for Oxford university courses.

For Canada, tuition fees for international undergraduates average out to be almost CA$30,000 per year, whilst the US averages $37,000 per year, though the prices are the same for residents and internationals.

For a three-year undergraduate degree, it’s not common for it to add up to £/$100,000 for internationals. When considering the increasing costs of living in the west, it could be another £/$50,000 on top of this, even if you find cheaper tuition in places like the Netherlands. If you want to avoid being a camping student in Tilberg or Geneva, you need to get the checkbook out, unfortunately.

The Common Logistics of Paying International Tuition Fees

With the notion of living in a tent or fighting for a place on a course looming, exchange rates when sending large amounts of money internationally aren’t exactly going to be on the minds of a young student. But with tuition fees and living costs rising, it’s important to recognize and avoid the hidden fees of international money transfers.

By definition, international students will need to exchange their money in order to pay for the local tuition and living – unless both countries share the same currency. Many students will consider setting up a local bank account in the new country they’ll call home, but this is logistically difficult in most places. It may not be possible to do it remotely, or they may require proof of address before you have even found a place to stay yet.

In the end, it’s common to simply use Visa or MasterCard on the online portals when paying for tuition abroad, using their bank card from back home, or making an international money transfer from their bank to the university.

The Hidden Costs of Paying International Tuition Fees

The issue with the above method is that banks will make the transfer/payment with a terrible exchange rate. Despite themselves having access to the true, mid-market rate, most will charge a 3-7% markup. So assuming a 1:1 Euro-Dollar parity, a €10,000 payment in dollars should cost $10,000, but ends up costing between $10,300 and $10,700. 

Over the course of an entire €100,000 degree, this could become $7,000 more expensive in the worst-case scenario than it needs to be. $7,000 for something many will not give a moment’s thought – or even realize ever happened. After all, it’s not like the bank will tell you the margin they’re taking in big font as you’re making the payment.

As for day-to-day living, it’s the same story. Using a foreign bank card to make payments for groceries and such will all incur an exchange rate markup until you eventually get a domestic bank set up. But even then, sending funds from your old, now-foreign bank to the new one will also incur this 3-7% markup. Not to mention that many banks still charge a $/£/€30~ fee per international transfer. 

How to Avoid Fees and Get a Better Exchange Rate

Now the fun part: looking at all of the excellent ways to transfer money! There is only one logical solution to saving thousands of wasted dollars and that is to find a company that handles your money without taking such a big cut. The answer lies within specialists: companies that focus on currency solutions.

Money transfer companies are firms that do exactly this. When transferring large amounts of money internationally with a money transfer company, the credible and competitive ones will only take 0.5 – 1% as markup, and often zero fees. Signing up is free, being sent a spending Visa/MasterCard is usually free, and withdrawing from ATMs abroad is free. Sending money abroad is pretty much free too, besides the markup.

The Logistical and Money-saving Benefits of a Money Transfer Company

It may just sound like a specialist offering a better price for their product, but it’s far more than that. Money transfer companies solve the earlier headache of not being able to set up a domestic bank account in your new country without all the proof of residency and paperwork. They actually replace the need for a bank account in all countries. They do this by offering virtual bank accounts.

A virtual bank account is a part of a multi-currency wallet, where users can open a Euro, USD, British Pound, and many more bank accounts virtually in seconds. You can receive money from them as they each have bank details (i.e. IBAN, sort code, or whatever pertains to each country). 

A virtual and/or physical spending card is also there. So, when using a card to pay for tuition abroad, the money transfer company card is used. Even if the money in the account isn’t in the right currency wallet, it will just exchange it there and then for you before paying the tuition fee. Again, with just a 0.5 – 1% markup/fee.

Best Way to Transfer Money Abroad for Tuition and Living?

As explained above, money transfer companies solve pretty much every issue for an international student when it comes to currency. They provide a new overseas bank account in seconds, cheap exchanges, daily spending abroad with a card at near-perfect exchange rates, and so on.

Companies that fit this description are the likes of Wise, Revolut, and World Remit. These are prime examples of multi-currency wallets and borderless spending cards.

However, there’s one caveat to all of this. For payments of a couple of thousand dollars or less, these should suffice. But, if a university asks for the annual tuition amount in one payment, such as $30,000, then a more… A specialist is required. Such as OFX, Currencies Direct, and TorFX.

These companies will keep your money safe and offer better over-the-phone support, which is handy to send large amounts. They even become advisors to a degree and may suggest that you lock in your next year’s tuition payment with a hedging product to eliminate currency risk (the risk of exchange rates drastically changing, which can cost dearly).

These FX brokers and specialists may not have slick multi-currency wallets, so they aren’t a replacement for the aforementioned Wise and Revolut, but would be a solution for transferring large sums of money abroad.