Monday, 23 January 2023

Egyptian university students abroad + at home are struggling to keep up with tuition and expenses amid the FX crunch

How are Egyptian university students at home and abroad keeping up with a weakened EGP + FX crunch? For Egyptian students attending university abroad and those who are enrolled at local universities with FX-denominated tuition fees, the recent weakening of the EGP has made it difficult to meet tuition payment requirements. The EGP has lost more than 50% of its value against the USD since last semester (October) and is down almost 90% since the central bank first devalued the currency last March in the Spring 2022 semester. Students who are studying abroad are also faced with the additional challenge posed by recently-introduced monthly spending limits on foreign expenses using Egyptian debit and credit cards.

REFRESHER- Last year, several banks began imposing limits on weekly and monthly FX withdrawals and foreign purchases. At least two banks — CIB and HSBC — later tightened these limits, before the Central Bank of Egypt (CBE) introduced exemptions for FX withdrawal limits for Egyptians who are abroad for educational or medical purposes.

Even with relaxed rules, students abroad still have spending limits on their Egyptian cards: At state-owned Banque Misr, monthly credit card spending limits abroad are set between USD 100-1.5k (depending on the card tier), while students face relaxed limits, according to a bank representative Enterprise spoke with. The representative declined to specify the exact limits for students. To access the higher spending limits, students need to submit their passports with entry and exit stamps, or otherwise provide proof that they are studying abroad. The National Bank of Egypt has a less structured, case-by-case approach: Students are required to email the bank asking for a specific amount of money, along with other paperwork to prove they are studying abroad and detailing the tuition fees, a representative told us. These requests are then studied and accepted or denied on a case-by-case basis. The bank generally sets a monthly FX withdrawal limit equivalent to EGP 7k, with 13% in fees and a set EGP 30 fee on each transaction. Card payments are capped at EGP 37k per month, with a 10% markup fee.

These limits come as the EGP devaluation has caused tuition and other expenses associated with studying abroad to skyrocket, meaning students are required to more strictly manage their spending and are concerned about maintaining future expenses. Hana Youssef, a management and economics student at the University of Bristol in the UK, began her degree in September — a month before the CBE floated the EGP as it moves towards a “durably flexible” exchange rate. Now, Youssef is much stricter with her spending habits, telling Enterprise that “even a difference of just a few GBP adds up when you convert it back to EGP.” Managing her expenses is critical to stay within monthly limits: “If I spend too much money one week, I max out my monthly FX spending limit, then it’s very difficult to obtain more,” she says. “I’ve had to cut down on my spending to comply with the new credit card limits. Last month after I paid my tuition I had just GBP 200 remaining the entire month,” Mahmoud Fady, a mechanical engineering student at Swansea University in the UK, told us.

The future is looking uncertain for many of them: For Fady, who currently lives in on-campus housing, meeting future payments is currently in doubt. He is able to pay his fees by presenting banks with a stamped proof of enrollment letter from his university that clearly indicates tuition fees and a copy of his student visa, but it is unclear whether banks will make FX accessible to him if he moves to off-campus housing. Altogether, he says it is possible that he won’t complete his studies abroad. “Transferring to a university back to Egypt is not out of the question for me. It’s ultimately my parents’ decision but many of my friends are moving back next year,” he explains.

Things aren’t easy for students at private universities here at home either: Students at the American University in Cairo (AUC) — which sets its tuition fees in USD but allows payments in EGP-equivalent — have seen their fees nearly double since last spring. The effective cost of tuition has jumped despite the fact that AUC did not raise tuition fees since last year, with the rate for Egyptian students remaining unchanged at USD 667 per credit hour, AUC spokesperson Rehab El Domiati told Enterprise.

AUC has introduced measures to help alleviate the burden — but some say it’s not enough: Last week, AUC established a Student Tuition Emergency Fund, which will “provide one-time financial support equivalent to 10% of the spring semester payable tuition for all [Egyptian] students” who pay the full tuition amount by 2 February, according to a letter from the AUC’s President, Ahmad Dallal. Some students have expressed their dissatisfaction with the measure, saying that an identical fund was also established last semester but did not sufficiently mitigate costs. Others claimed in posts on Rate AUC Professors — a popular Facebook group where students typically share their evaluations of courses and professors — that the maximum amount awarded to students through the fund was minimal, and demanded that the university set a fixed exchange rate for tuition payments.

AUC students were also given the chance to pay tuition in advance at a lower FX rate: In December, the university allowed students to pay for the following two semesters’ tuition fees at the daily exchange rate at the time. Malak, who began her degree in Fall 2020 — when the EGP stood hovered around the EGP 15 mark — says her parents took that chance, choosing to forfeit interest on a certificate of deposit in favor of hedging against a year of FX fluctuations. “It is unclear whether the university will process the payments made at the December rate or if it will charge us at the current rate and just implement the latest one-time financial support equivalent to 10% for us as well,” she told us.

Again, the future remains very much unclear: Some students we spoke with voiced concerns about whether they will be able to cope with the financial burden of the rest of their education. Bassel Rezk, a mechanical engineering student, who enrolled in Fall 2018 needs to take a credit hour overload for his remaining two semesters to graduate in the Fall 2023 semester. “I don’t think I will be able to handle that financially and I’m not sure if the situation will improve by the fall semester.” AUC currently does not have a cap on how much tuition can be raised y-o-y. “This decision is made year-by-year. We cannot project ahead,” El Domiati told us.

Your top education stories for the week:

  • The British Embassy in Cairo yesterday hosted an edtech showcase, where 11 UK-based education companies presented their products to owners and CEOs of local British and international schools. (Press release)
  • EEP’s acquisition of Selah El Telmeez done: Egypt Education Platform (EEP) has acquired a “majority stake” comprising 71.4 mn shares in student lifeline Selah El Telmeez for EGP 646 mn.
  • A USAID grant for primary education: The House of Representatives approved last week a USD 5.7 mn grant from USAID for primary education, and an EUR 2 mn grant from France’s AFD to finance the teaching of French in public schools.
  • The Higher Education Ministry kicked off the second phase of University Centers for Career Development, an initiative that aims to improve the employability of public university graduates in partnership with USAID and AUC. (Statement)
  • Our first landscaping school? Talaat Moustafa Group inked an agreement with the Education Ministry to establish an applied technology school in the field of landscaping. (Statement)

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.