Key Takeaways
• Student remittances under LRS in FY2025 fell to the lowest level in five years with an 18.77% year-on-year drop.
• February 2025 saw a 50.52% decline in education remittances compared to January, amid stricter visa policies and economic pressures.
• Indian student study permits dropped by over 25% in 2024 across the US, Canada, and UK, directly impacting remittances.
India’s outward remittances for education, especially those sent by students under the Liberalised Remittance Scheme (LRS), have reached their lowest point in five years during FY2025. This analysis explores the reasons behind this sharp drop, examines the latest data, and considers what these changes mean for students, families, and policymakers. The focus is on student remittances, the workings of the Liberalised Remittance Scheme, and the role of the Reserve Bank of India in managing these flows.
Purpose and Scope
The purpose of this analysis is to provide a clear, data-driven understanding of why student remittances from India have fallen so sharply in FY2025. The scope covers:
- The latest trends in student remittances under the LRS
- The structure and rules of the Liberalised Remittance Scheme
- Economic, policy, and social factors influencing these trends
- Comparisons with other LRS categories
- Implications for students, families, and the education sector
- Evidence-based conclusions and practical takeaways
Methodology
This analysis draws on official data from the Reserve Bank of India, budget documents, and recent financial reports. It reviews monthly and yearly remittance figures, policy changes, and expert commentary. The approach is objective, focusing on facts and trends rather than opinions. Visual descriptions of data trends are included to help readers picture the changes, even without charts or graphs.
Key Findings Upfront
- Student remittances under LRS in FY2025 are at their lowest in five years.
- February 2025 saw a 50.52% drop in education remittances compared to January 2025.
- The total amount sent abroad for education in FY2025 fell by 18.77% year-on-year.
- Policy changes, such as higher TCS thresholds, did not reverse the decline.
- The drop in student remittances is sharper than in other LRS categories, suggesting unique pressures on overseas education.
Data Presentation and Visual Descriptions
Monthly and Yearly Remittance Patterns
The Reserve Bank of India’s monthly data shows a dramatic fall in student remittances:
- January 2025: $368.21 million sent abroad for studies
- February 2025: $182.17 million, a drop of over half from the previous month
- March 2025: Year-on-year decline of 18.77% in education remittances
If you imagine a line graph, the curve for FY2025 would show a steep downward slope starting from January, with February marking the sharpest dip in five years.
Annual Trends:
- FY2024: Student remittances reached $3.47 billion, the highest ever
- FY2025: The total dropped by 6.85% to $29.56 billion for all LRS remittances, with education showing the largest fall
The overall pattern is a reversal from the steady growth seen in the previous decade, where each year brought higher remittances for overseas education.
Historical Context
From FY2014 to FY2024, education remittances grew rapidly. They became the second-largest category under LRS, after international travel. The current decline breaks this long-term trend, signaling a major change in how Indian families approach overseas education.
Comparisons, Trends, and Patterns
Student Remittances vs. Other LRS Categories
While student remittances have dropped sharply, other types of LRS outflows show different patterns:
- International Travel: Still the largest category, with over $17 billion sent abroad in FY2024. In March 2025, travel remittances grew by 12.3% year-on-year to $1.12 billion.
- Investment in Equity and Debt: Rose from $104.98 million in January 2025 to $173.84 million in February 2025.
- Medical Treatment: Fell by 56.3% year-on-year in March 2025.
- Maintenance of Close Relatives: Dropped by nearly 22% year-on-year during April-February of FY2025.
Visual Description: If you picture a bar chart, the bar for student remittances in FY2025 would be much shorter than in previous years, while the bar for travel would remain tall or even grow. Investment bars would show a steady rise, and medical treatment would show a sharp drop.
Patterns in Student Numbers
For the first time in four years, the number of Indian students going to the United States 🇺🇸, Canada 🇨🇦, and the UK has fallen at the same time. Study permit approvals for Indian students in these countries dropped by at least 25% in 2024. This decline in student numbers matches the fall in remittances, showing a direct link between fewer students going abroad and less money being sent for education.
Factors Driving the Decline
1. Fewer Students Going Abroad
The main reason for the drop in student remittances is the lower number of Indian students heading to top study destinations. This is due to:
- Stricter visa rules in countries like Canada 🇨🇦, the United States 🇺🇸, and the UK
- Longer processing times and higher rejection rates for student visas
- Uncertainty about post-study work and immigration options
2. Economic Pressures
Several economic factors have made it harder for families to afford overseas education:
- Global economic uncertainty has made families cautious about spending large sums on foreign education.
- Slower income growth in India means fewer families can pay for expensive study programs abroad.
- High base effect: The record-high remittances in FY2024 set a tough comparison for FY2025, making the drop look even steeper.
3. Policy Changes
Tax Collected at Source (TCS) Adjustments
In February 2025, the Indian government raised the threshold for TCS on LRS transactions from ₹7 lakh to ₹10 lakh. This means:
- No TCS on remittances up to ₹10 lakh per year
- No TCS on education remittances if the money comes from a recognized education loan
- 5% TCS on amounts above ₹10 lakh (except for education loans)
These changes were meant to make it easier for families to send money for education. However, the decline in remittances continued, showing that tax relief alone was not enough to reverse the trend.
4. Changing Preferences and Alternatives
- Students are looking at more affordable countries for study, beyond the traditional favorites.
- Indian universities are improving, with more international tie-ups and better programs, making local options more attractive.
- Online and hybrid education is growing, reducing the need for students to move abroad.
The Liberalised Remittance Scheme: Structure and Rules
What is the LRS?
The Liberalised Remittance Scheme, managed by the Reserve Bank of India, lets Indian residents send up to $250,000 abroad each financial year for approved purposes. When it started in 2004, the limit was just $25,000. The scheme covers:
- Education abroad
- Medical treatment
- Buying property
- Investing in foreign stocks
- Travel and gifts
- Business and emigration expenses
All resident individuals, including minors, can use the LRS. The Reserve Bank of India provides detailed rules and updates on the scheme, which you can find on their official LRS page.
How Does It Work for Students?
Under the LRS, students or their families can send money abroad to pay for tuition, living expenses, and other costs. They must follow the annual limit and provide documents to prove the purpose of the remittance. Banks handle the paperwork and report transactions to the Reserve Bank of India.
Evidence-Based Conclusions
Why Did Student Remittances Fall?
The evidence points to a mix of factors:
- Fewer students are going abroad due to stricter visa rules and less attractive immigration pathways.
- Economic uncertainty has made families more cautious about spending on overseas education.
- Policy changes like higher TCS thresholds helped a little but did not offset the bigger trends.
- Alternative options such as better Indian universities and online courses are becoming more popular.
What Does This Mean for Stakeholders?
- Students and Families: Those planning to study abroad face more hurdles, both in getting visas and in managing costs. They may need to consider new destinations or local options.
- Indian Education Sector: Local universities may see more demand as fewer students go abroad.
- Foreign Universities: Institutions in the United States 🇺🇸, Canada 🇨🇦, and the UK may need to adjust their recruitment strategies as Indian student numbers fall.
- Policy Makers: The government and Reserve Bank of India may need to review policies to support students and manage foreign exchange flows.
Limitations of the Analysis
- Data Lag: The latest figures are up to March 2025. Trends may change as new data becomes available.
- Country-Specific Details: While the analysis covers the top destinations, it does not break down trends for every country.
- Unmeasured Factors: Personal choices, family situations, and sudden policy changes can affect remittance flows in ways not captured by the data.
Practical Guidance and Takeaways
For students and families:
- Check the latest visa rules for your chosen country before making plans.
- Compare costs and benefits of studying abroad versus local or online options.
- Use the LRS wisely: Stay within the $250,000 limit and keep records for all transactions.
- Understand TCS rules: If your remittance is below ₹10 lakh or comes from an education loan, you may not owe TCS.
For policymakers and educators:
- Monitor trends in student mobility and adjust policies to support students.
- Promote local education quality to retain talent and meet demand.
- Work with foreign partners to create more affordable and accessible education pathways.
For more detailed information on the Liberalised Remittance Scheme and its rules, visit the Reserve Bank of India’s official FAQ page.
Final Thoughts
The sharp drop in student remittances under the Liberalised Remittance Scheme in FY2025 marks a turning point for India’s overseas education landscape. While policy tweaks like higher TCS thresholds have offered some relief, the main drivers are fewer students going abroad, economic caution, and changing preferences. As reported by VisaVerge.com, these trends are likely to continue unless there are major changes in global education, immigration policies, or economic conditions.
Stakeholders should stay informed, plan carefully, and be ready to adapt to a changing environment. The Reserve Bank of India will continue to play a key role in managing these flows and updating the rules as needed. By understanding the data and the reasons behind these shifts, students, families, and policymakers can make better decisions for the future.
Learn Today
Liberalised Remittance Scheme (LRS) → A program allowing Indian residents to send up to $250,000 abroad annually for approved purposes like education and travel.
Tax Collected at Source (TCS) → A government levy on money sent abroad under LRS, with certain thresholds and exemptions applying to education remittances.
Reserve Bank of India (RBI) → India’s central bank responsible for regulating financial policies, including managing the Liberalised Remittance Scheme.
Student Remittances → Funds sent by Indian students or families abroad to cover education-related expenses such as tuition and living costs.
Study Permit → An official authorization issued by foreign countries permitting Indian students to study abroad legally.
This Article in a Nutshell
Student remittances from India under the LRS hit a five-year low in FY2025, driven by fewer overseas students, stricter visas, and economic caution. Despite tax reliefs, education remittances dropped sharply, highlighting key shifts in global student mobility and the rising demand for local or alternative study options.
— By VisaVerge.com
