For ultra-high-net-worth families, a foreign education for their children is now a default milestone in their long-term planning. It is not just an academic decision but also a strategy for global mobility, wealth planning, and legacy building.
Today, nearly every HNI family either has a child studying overseas or one preparing for it. This journey for a family is centred around numerous financial decisions and hence regulations. Following is a breakdown of Reserve Bank of India (RBI) regulations, key tax implications and strategic planning steps required to help families approach international education in a compliant and future-ready manner.
As costs rise and global regulations evolve, a well-structured approach has become more essential than ever.
The Indian regulatory framework
For UHNI families with diverse portfolios, family offices or international holdings, funding their child’s education can be a complex process. It includes coordinating multiple sources of funding, managing international bank accounts in the child’s name and offshore investments.
Navigating these complexities requires clarity on the regulatory framework set by the RBI. Under the Foreign Exchange Management Act (FEMA), governed by the RBI, students going abroad for education are classified as non-resident Indians (NRIs) from the time they leave India, provided their intention is to stay abroad for an uncertain period, even if the course has a defined duration.
This decision was made considering that many students work part-time or receive scholarships, making them financially independent from their families in India. Once designated as NRIs, they are entitled to a range of benefits:
- Students can receive remittances from close relatives in India based on a simple self-declaration
- Remittances of up to $1 million from sale proceeds or balances in Indian accounts
- Continuation of educational loans availed in India before departure
- Access to all other NRI facilities under FEMA
Keeping these benefits in consideration, UHNI families can plan their wealth management and international mobility goals efficiently.
Considerations for UHNI families
UHNI families typically have more complex wealth structures and longer planning horizons. Here are a few ways in which they can ensure a smooth and compliant process, keeping all their goals in mind:
- Think about education early on: Consider the child’s international education as part of broader goals such as global citizenship, future residency and succession planning.
- Use the Liberalized Remittance Scheme (LRS) effectively: LRS allows individuals to remit up to USD 250,000 per financial year for purposes including tuition fees and living expenses. Once classified as NRIs, students can receive remittances of up to USD 1 million from Indian accounts.
- Time the switch to NRI status: Examine the time at which the student should adopt NRI status. Parents must plan finances carefully before the student’s residential status changes to non-resident, as gifts from resident parents to an NRI child are capped under the LRS limit. Establishing offshore trusts, utilizing the family’s investment vehicles and restructuring ownership of international assets before the child transitions to NRI status are some ways to future-proof compliance and control.
- Factor in rising international tuition fees and visa policies: Several countries have recently revised tuition fee structures, often creating a stark difference between local and international students. For example, Canada now charges international students nearly five times the fee domestic students pay. Countries like Norway and Finland, previously known for free or subsidised education, now charge non-EU students upwards of €13,000 and €4,000 to €18,000 respectively. Meanwhile, English-taught programs in countries like Czech Republic or Sweden can cost up to €18,500 annually.
Post-study work visa policies also vary widely. The US offers Optional Practical Training (OPT) for F-1 visa holders, with extensions for STEM graduates; the UK provides a 2-year Graduate Route (3 for PhDs); Canada allows up to 3 years under the Post-Graduation Work Permit (PGWP); and Australia permits stays of 2 to 6 years based on degree level and location. Other countries like Germany, Finland, Ireland and Singapore offer temporary work permits or pathways to long-term residence depending on employment.
These dynamics influence decisions such as long-term residency, making strategic education planning even more critical for UHNI families. Alternatively, families may choose to explore residency or citizenship by investment to reduce the impact of rising fees and visa limitations.
Ensure that all the tax and foreign worker programs are clearly understood in the host country. Choosing the right country and leveraging tax-efficient funding structures can help optimize both educational outcomes and wealth preservation.
For UHNI families, it is imperative that they work with experienced, multi-jurisdictional advisors like immigration consultants, private bankers and wealth managers, and cross-border tax experts to align their children’s education journey with broader legacy, wealth transfer and mobility goals. This ensures long-term compliance in asset structuring across jurisdictions.
Ashvini Chopra, head –family office solutions, Avendus Wealth Management. Views are personal.
