COSTS
by BILL HOFFA

AFFORDING STUDY ABROAD

It is virtually impossible to generalize about the costs of studying abroad. Ideally, its expense is roughly equivalent to the costs of home campus study, and is afforded by the same student, family, and institutional financial means. But this is not always the case. The questions you must therefore ask, in choosing a program and location, must concern not only what it costs, but how it can be afforded. Program costs can vary (a) by location, (b) by sponsor, (c) by program type, (d) by duration, and (e) by home campus tuition and financial aid policy.

Most, but not all, program expenses are incurred overseas; there are also U.S. administrative expenses which need to be paid. Overseas costs vary by country: e.g. the cost of living in Western Europe is, for instance, likely to be more than the cost of living in Latin America. They vary by location within a country or region: e.g. Paris is a more expensive place to live than a village in Provence. They vary by program: some programs include more features, better support services, more on-site supervision, tours and excursions, etc., than others; and some take place at institutions which charge more tuition or higher room and board fees, than others. Finally and obviously, costs vary by program duration. You should be aware, however, that there are economies of scale, so that, e.g., a year program rarely costs twice as much as semester program costs doubled, since fixed administrative and travel costs are spread over a longer period of time; summer programs, when travel is taken into account, can cost almost as much as quarter or semester programs, and often financial aid is harder to get.

Program costs also vary according to the financial resources and policies of U.S. institutions. Some institutions, private and public, charge full home-campus tuition (including or not, room, board, and fees) for participation in home-campus-sponsored programs (including direct exchanges with foreign institutions) and/or in any other program--in which case you are paying for the cost of comparable home campus credit. Other institutions ask you to pay a small or large home-campus administrative fee, but otherwise you pay whatever is charged by the domestic or foreign program sponsor. Some campuses have one fee for their own programs, and another set of charges for other programs. Other institutions charge nothing extra; you only pay the domestic or foreign program sponsor. Sometimes, if you are trying to transfer credit into your institution from a program which has not been pre-approved, there is a charge per credit unit.

As you read campus and program materials and try to estimate the full costs of study abroad, you should become absolutely certain what is, and is not, covered in the stated fees. While an aggregate figure may be stated, read the fine print carefully. Be especially alert to when the program formally begins and ends, in relation to your arrival and departure, and whether vacation and holiday periods are covered. Here is a check list:

In addition, you must take into account the costs of your social life, of buying clothing and souvenirs, of mail and other long-distance communications. Some such things will amount to less that what you spend on campus, and much will cost more. Past participants or program representatives can perhaps help you with these estimates.

FINANCIAL AID


The amount of financial aid available to assist you and your parents may depend upon one or more of the following considerations:

In general, while there is no huge pot of "extra" financial aid designated nationally for study abroad, aid exists from:

Of these categories by far the largest is federal and state aid. Federal aid is money supplied through Title IV of the Higher Education Act (recently updated and extended). If you are participating in a study abroad program which is approved by your institution (and are taking a full-course load), and via which you will be earning credit toward your degree, you qualify for that amount and type of federal aid assistance you are otherwise normally qualified to receive for your home campus studies.

This aid package may be made up of one or more of the following:

Perhaps needless to say, qualifying and applying for such monies and the process of delivery and repayment is a very complicated and time-consuming business. You therefore need the assistance of your campus Financial Aid office. Make an appointment with the person in this office who is designated to process aid for study abroad. Do this as soon as you think you might wish to study abroad. Also seek the help of your study abroad adviser, who can also provide encouragement and guidance. On-line resources: http://www.finaid.org,
http://www.ed.gov/prog_info/SFA/student.html,
http://www.finaid.org/finaid/picks.html

BUDGETING


The overall cost of living abroad can sometimes be higher, or lower, than at home. Because you are in an unfamiliar environment, with local costs stated in a currency you may not be able to translate immediately into dollars, it is easy to be misled. You may also be confronted with an almost endless array of entertainment possibilities and attractions. A go-slow approach to buying much makes sense. Try to live within a prudent budget which will take care of all necessities and allow you to live on the means available to you for the duration of your stay. There is little more dismaying than to run out of funds overseas, with no easy or quick means of replenishment. The following suggestions may be helpful:

CURRENCY EXCHANGE


To live in a foreign country, you will have to learn to use a new currency, which you can purchase with U.S. dollars, travelers checks, and th like. Exchange rates can flucuate daily. To find out current rates, contact http://www.travlang.com/money. It is not recommended that you carry large amounts of cash with you. Traveler's checks are the safest and most convenient way for carrying your money. Lost or stolen cash cannot be replaced; traveler's checks can be refunded. Be sure to keep a separate record of the serial numbers of your traveler's checks. It is best to have three copies of these. Should the checks be lost or stolen, you will need to have these numbers available in order to obtain a refund.

Traveler's checks are available in various denominations of various currencies (e.g. American dollars, British pounds, French francs, etc.) and can be obtained at most banks. The major companies dealing in traveler's checks are Citicorp (First National City Bank), American Express, Thomas Cook, Bank of America, and Visa. There is a 1% or more commission charge for traveler's checks purchases. Buying traveler's checks in small denominations means carrying a bulkier package of checks with you, but it also means that you have greater control over the amount of currency you receive each time you cash one or more of these checks.

American currency can be exchanged for foreign currency at most international airports prior to your departure; at the international airport after you arrive; and at most major banks and railroad stations abroad. It is often helpful to have some local cash-on-hand before you leave the airport, for buses, taxis, a cup of coffee or a snack. The exchange rates and service fees at U.S. airports are invariably less favorable than at the international airport of your arrival. Try to avoid having to exchange currency at hotels, restaurants, or retail shops, as the exchange rate will generally be outrageous.

Banks abroad afford you the fairest exchange rate available. You can expect to pay a commission (which varies from one country to another) every time you exchange currency. In some countries the commission is based on a percentage of the amount you exchange, while in others there is a flat fee regardless of the amount of the transaction. The flat fee rate makes it to your advantage to exchange larger amounts to avoid repeat visits to the bank window, although this necessarily means that you might be carrying more cash than advisable. You need to find a happy medium between carrying large amounts of cash and paying repeat bank commissions for exchange transactions.

BANKING


Domestic ATM cards with a cirrus designation can often be used to obtain forign currency from foreign ATM units at a pretty good exchange bank. Check with your local bank to see if this is possible in the overseas locations(s) to which you will be heading. Make sure that your PIN can be used overseas. Most students wait until arrival in the country to establish a bank account--your program orientation will usually tell you how to do this. This lets you become acquainted with the various banks and the services and with the different types of bank accounts and to find the branch office closest to where you will be during banking hours. Many banks have their own bank cards, allowing you to make withdrawals from their ATM's. While there are advantages to having your own foreign bank account, it is also possible to use VISA or MASTERCARD at many foreign banks, to get cash in the local currency, drawing on money you or your parents have deposited. If you have a credit card or bank car that is on e.g., the CIRRUS network, you should be able to withdraw money from most bank machines in Europe, and increasingly in other regions. Find this out before you depart.

TRANSFERRING MONEY FROM HOME


If you run short of cash while abroad, money can be sent from home in a variety of ways:

  1. The quickest way, although the most expensive, is by cable transfer from your American bank to a bank abroad. It is wisest to investigate this before you leave. Your hometown bank may have to process cable transfers through an internationally recognized American bank, which will in turn have to deal with a comparable internationally recognized bank overseas.

  2. American Express money orders are relatively fast. Transactions must be initiated at an American Express office in the United States and completed at one of their branch offices abroad, either of which could prove inconvenient, depending on their location. American Express can cable money to one of their overseas offices, where it can be picked up, with appropriate identification. Since not all American Express offices can prepare money orders or cable money, it is wise to find this out in advance.

  3. It is also possible to obtain from an American bank a foreign currency draft drawn against a recognized bank in the foreign country (e.g. a check in Spanish pesetas drawn against the Banco Hispano-Americano in Madrid for a student in Salamanca). This draft can then be sent to you (by registered or certified mail) for cashing abroad.

  4. Should you prefer receiving a bank draft in American currency, a cashier's check drawn against a major American Bank (e.g. Chase Manhattan) can probably be obtained from your hometown bank and forwarded to you abroad (Use Registered or Certified mail). However this may prove to be a relatively slow way of obtaining the money you need, since you still have to wait for the foreign bank to confirm the check's validity.

Needless to say, personal checks drawn against your local hometown bank will be virtually worthless because of the long amount of time it takes each bank to clear the check.

CREDIT CARDS


Credit cards make foreign currency transactions easy and are invaluable in a financial emergency. Take a credit card along, if you can. but USE IT WISELY; overspending is so easy to do and fees and interest charges can be costly. Also, the loss or theft of a card abroad can be a huge inconvenience when you are traveling.

Possession of an American Express card, Visa card, or MasterCard will be helpful should you need to acquire emergency funds while awaiting money from home. You can go to an American Express office and cash a personal check for up to $1000 (only the first $50 will be provided in cash, the balance in traveler's checks). With a Visa card you can usually obtain a cash advance against your account from a foreign bank. The bank will take your passport number and your credit card number and phone them both into a central computer to prevent you from exceeding the established limit.

Credit cards can also come in handy when you wish to charge a purchase to your account rather than pay cash. However, not all merchants abroad accept credit cards, regardless of the name brand: many of your gifts and/or souvenirs may be obtained at small shops and bazaars that do not provide charge services. The amount charged to your credit card bill is be based on the exchange rate on the day that your bank or credit card company processes the transaction.

In the case of all financial transactions abroad, be sure to have adequate identification with you (e.g. your passport).

Note:
Not all of the preceding counsel may be true in every country--indeed, it is probably more accurate for the major Western European countries, than for the rest of the world. But, banking IS a world-wide phenomenon these days, so the above is more or less accurate for many locations.

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