Editors' pick: Originally published May 3, 2016.
U.S. college students have heard the siren song of overseas studies and answered it strongly, with 975,000 collegians heading to foreign bourses to continue their education in 2015, according to the
Getting a passport and hitting the wide-blue yonder is a great personal educational policy (most companies love hiring risk-takers and comfort-zone shedders), and let's face it, seeing the world and experiencing different cultures is a blast, too.
"International experience is one of the most important components of a 21st century education," says Dr. Allan E. Goodman, president of the IIE. "Studying abroad is one of the best ways undergraduate and graduate students gain the international experience necessary to succeed in today's global workforce. And studying in another country prepares students to be real contributors to working across borders to address key issues in the world we share."
There's a downside, too, and it can be a big one. One of the biggest hurdles foreign-bound students face going abroad is money management, especially budgeting and cutting costs.
According to the IIE, the average cost of studying abroad for one semester was $17,785 in 2013. Plus, the little things add up, too.
"The fees charged by many banks and credit cards when used abroad add up fast," notes Jennifer Viemont, founder of Beyondthestates.com, an overseas college study services company. "For example, many banks charge $5 in addition to a 3% of the amount you withdraw and credit cards and many credit cards charge a 3% on purchases."
Yet with some savvy financial steps, both in the planning and execution stage, young collegians can have a great overseas experience on a prudent budget - and here are five ways to get started:
- Open a foreign bank account: Joe Cross, general manager of TransferWise, a U.K.-based financial technology firm specializing in money transfers, says that by opening a foreign bank account, students can avoid bank and international transfer fees, especially if they're planning an extended stay. "Knowing that exchange rates will fluctuate, having a foreign bank account lets students focus on the sticker price instead of trying to convert everything to dollars in their head," he says. "Parents can also send money from home using an international money transfer providers like TransferWise, thus avoiding internal bank fees."
- Alert your bank ahead of time: Your bank needs to know you're studying abroad, so you can continue your banking experience unimpeded. "To avoid the nightmare of having a bank card cancelled abroad -- and the many international phone calls it will take to have it turned back on -- college students should alert their bank ahead of time that they'll be leaving the country to avoid false fraudulent flags," states Cross. "They should also alert their bank if they make any travel plans while abroad."
- Use multiple branches: "A good tip is to stick to a budget and have your parents deposit money into an account that has branches overseas so it can be withdrawn with no additional expenses," says Cary Carbonaro, a financial planner and author of the book "Money Queen's Guide' (Carbonaro studied abroad herself while in college.) "Also having a platinum American Express card is great, too. You can exchange and cash checks anywhere there's an AmEx location for the lowest fees. Every time you exchange money it costs you, so try to use credit cards and pay in full each month."
- Avoid the priciest locales (and still gain the cultural experience): "I thought I had truly seen Europe after side trips studying in Paris and living in Switzerland, but traveling to lesser-known countries this year was a real eye opener." says Britanny Carter, marketing manager at Flying Yak, an online travel destination services and comparison site. "Slovenia has the breathtaking beauty of Switzerland and Budapest nightlife rivaled New York all at a fraction of the cost." To target a few value-oriented destinations, use FlyingYak's interactive map to search for hidden gems based on price, nightlife and other overseas study criteria.
- Live like a local: Overpriced trinkets and overrated food are never fun, especially on a budget, says Carter. "For example, Argentina is infamous for their steaks, so my friends and I were planning on splurging for one of the top spots in Buenos Aires," she explains. "We ended up meeting a local that took us to an incredible underground steakhouse. We gorged on local specialties, prime steak and wine for only $20 each." To qualify for local deals, sign up for an international student identity card, which provides access to discounts across the globe. TransferWise reports the cards are available in 130 countries and are a "cheap purchase", at between $4 and $20 per card.
Studying abroad really can be the experience of a young lifetime. You don't have to break the bank to do so, and the financial education you get in living international bourses on the cheap will hone money skills you'll be using for a lifetime.