The Cost of Studying in Canada

The Effect of Currency Movements in 2013!

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This is the rst issue of a twice yearly newsletter which looks at the cost of Canadian education from the outside in.! A family planning on sending their son or daughter abroad to study are faced with a myriad of decisions which can be overwhelming and which include amongst others, where to send their child and how much this will cost. The main destinations for sending international students to study abroad remain the US, the UK, Australia, France, Germany, Canada and increasingly China. All of these countries set and list the cost of study in their own local currencies. Families, though, are faced with paying for schooling in their own currency. The relative value of these currencies (the destination country and the home country) are therefore key inuences in the a"ordability of sending a student abroad and applies to every

family making this decision. The rst of our two newsletters, to be published each year, looks at the impact that currency movements during 2013 have had on the relative cost of education in Canada for international students.!

What did 2013 bring?!

We regularly monitor the movements in key currencies and focus in particular upon the movements from September to September and January to January. In this particular newsletter we focus upon the movements from Jan 2013 to Jan 2014.! In order to accurately measure and gauge the impact of currency movements we use an international education index which takes account of the number of international students in each country, ranks the top 10 countries of origin of these students, weights them and calculates the weighted average movement of the key currencies. The results are shown on Page 3. #

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Relative movements in index 1/1/13 to 1/1/14 Canada USA UK Australia France Germany % movement 5.4 -2.0 -4.2 10.1 -1.0 -3.8

Cheaper or More Expensive cheaper more expensive more expensive cheaper more expensive more expensive

What stands out clearly from the above is the appreciation of the USD, British Pound and Euro (shown above as a negative) and the relative weakness of the Canadian and Australian Dollar. ! The weakness in the Australian Dollar (AUD) was caused from a slowing of demand from Asia, weak domestic demand, an unsettled domestic political situation and the conscious policy of the Australian Central Bank to talk the AUD down to lower levels to stimulate economic growth. Forecasts for the next 6 months are not particularly clear but suggest a continuation of AUD weakness. ! Canadas (CAD) currency weakness is of a slightly di"erent nature linked more to being in a di"erent part of the economic cycle compared to the US (USD) and Europe (EUR). The outlook for interest rates in Canada appears muted whilst the consensus is to anticipate rising interest rates in the US which normally leads to a higher USD relative to CAD. In Europe, by contrast, the consensus is developing that the European economies have reached rock bottom and that economic growth can only pick up thus causing the value of the Euro (EUR) to rise. In a similar manner to the AUD, there are no strong reasons for the CAD to strengthen over the next 6 months. ! The relative currency movements in 2013 leave Canada and Australia in a far better position than at the outset of 2013. Study in Canada or Australia is 7% to 15% cheaper compared to the USA, UK and Europe. This is an enviable position to start the year.!

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The Canadian Perspective

The table on Page 5 (below) shows the change in the relative currency values of the top 50 countries which sent students to study in Canada in 2013. ! As we have already noted above the general weakness of the CAD and specic strength of a number of countries currencies has resulted in a widespread improvement in the attractiveness of a Canadian education in terms of its cost. Within this there are some interesting points of note. ! China; As the largest country sending students to Canada, changes in the relative exchange rate between China (CNY) and CAD is the most keenly observed. The weakness of the CAD combined with the upward pressure on the CNY saw a near 10% cheapening in the cost of study in Canada over 2013. Once we overlay the 6.5% increase in personal disposable income that Chinese urban populations saw in 2013, we can see that from a Chinese perspective Canada became a much more attractive place to study, at least in terms of costs. ! India: In contrast, the weakness of the Indian Rupee (INR) outdid even that of the CAD causing a near 6% increase in the cost of study in Canada. Although, India is still seeing growth in personal incomes (circa 4%) this has slowed sharply from the 8-10% growth rates seen as recently as 2008-2010. The INR has seen a nearly 50% reduction in value against the CAD over the past 5 years and there should be some concern that as disposable income slows there is pressure on the capacity to pay for study abroad. ! Japan: The Japanese Yen (JPY) continued its trend of weakness caused largely by the Japanese governments determination to kick start the economy after decades of economic stagnation. Against the CAD the JPY weakened by over 13%. With personal income growth at 0-1% this caused a material increase in the costs of Canadian education, from a Japanese perspective. All may not be so gloomy looking forward though. The Japanese government has embarked upon a monetary and scal stimulus that makes the US look positively scrooge-like and which may well result in positive levels of ination, GDP and income growth over the next few years.#

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How currency movements impacted Canada as an education destination; 2013 to 2014

China India Korea Saudi Arabia USA France Japan Mexico Nigeria Hong Kong Vietnam Brazil Germany Pakistan Taiwan UK Russia Morocco UAE Bangladesh Malaysia Turkey Phillipines Venezuala Thailand Tunisia Colombia Ukraine Indonesia Egypt Jamaica Singapore Senegal Switzerland Italy Cameroon Spain Australia Kenya Ghana South Africa Kazakhstan Algeria Lebanon Libya Trinidad & Tobago Chile

More Expensive to study in Canada

-40% -30% -20% -10% 0%

Cheaper
10% 20%

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Turkey: The Turkish Lira (TRY) also weakened materially in 2013 (12.7%). This was the result of the economy slowing below the historic 5% growth levels, concern over the impact of tighter global monetary conditions and specically at the end of the year a domestic political corruption scandal which alone saw a 7% fall in the value of the TRY. As we write, this scandal is picking up in intensity and the outlook for the TRY looks unclear at best. The number of Turkish students studying abroad has been increasing steadily and there must be some risk that the lower TRY will at a minimum temper this growth. ! Europe: As the third largest source of students in Canada, Europe (especially France and Germany) is an important area for Canadian education, especially for institutions in Quebec. The relative strength of the Euro (EUR) then was welcome relief as the economic background in many European countries showed little signs of improvement. The 10% cheapening of education in Canada from a european perspective should make Canada more attractive as a study destination looking forward.! USA: CAD weakness against the USD of 6.5% should help attract US students to Canada. There are though some signs of action from US institutions, who in response to falling enrolment levels, are increasing tuition discounts or even cutting tuition fees. The skirmish between University of Windsor and Wayne State University over tuition costs for international students could be a sign of things to come. ! Brazil: With the Science Without Borders programme, Brazil has become and increasingly important source of students for Canada. The weakness of the Real (BRL) therefore has become something of a negative. Its fall in value, of 8% during 2013, though has impacted the Brazilian government and Brazilian students rather than Canadian institutions as the government funds the majority of the costs of study.!

Concluding Thoughts
On the basis of currency movements in 2013, Canada looks a more a"ordable place to study from a Chinese and European perspective. By contrast, the perspective from Japan and India is less advantageous. Of the smaller source countries, Morocco, Nigeria, Vietnam, Bangladesh, Senegal, Cameroon and the UAE each saw an improvement in relative a"ordability and we would expect to see more interest in studying in Canada from these countries in 2014. !

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