In late May, it was revealed that the Euro (EUR) and the US dollar (USD) were of equal value for the first time in 20 years. At the time of writing, 1 USD amounted to 0.99 EUR, and while this is a major event on its own, it may have some surprising implications for the world’s student population.
According to an article in the Los Angeles Times, this economic revelation may be a blessing and a curse. The increase in dollar value by 12 per cent could be a threat to American exports because goods become more expensive and competitive, but there is a bright side as foreign goods from the EU imported to the US become less expensive.
This development is extremely important when it comes to education, especially in the case of university fees for international students. Over 65 countries peg their local currency to the US dollar. As of 2022, Trinity is ranked as the 12th most international university in the world according to Times Higher Education. Needless to say, a significant portion of the student body is from outside the EU and thus are required to pay international fees.
Trinity’s fees for non-EU international students for the 2022/23 academic year average at around €20-30,000. Taking into account the current exchange rate between the dollar and the euro this would equate to around $20,089.70. One of the largest demographics of international students at Trinity are Americans who often come to Europe to avoid the high prices of an American university education. This economic development will be beneficial to them and any international student whose local currency is pegged to the dollar.
Dr. Davide Romelli is a professor of macroeconomics at Trinity. When asked about whether Trinity would see an increase in non-EU international students paying university fees upfront due to the financial equity of the two currencies, he responded that “I would say some countries have fixed exchange rate regimes. If I think about some countries in the Middle East, or rich oil exporting countries, they have a certain number of exchange rates with the dollar, so there might also be an increase of these students”.
Another factor that determines how many non-EU international students attend Trinity as visiting or full-time students is the cap on the number of students College can receive and the grade requirements for the courses they wish to study. “In relation to this”, Rommelli said, “there is a lot of competition from other universities both within Ireland and abroad. With Trinity recently re-entering the top 100 higher education institutions in the world, the depreciation of the euro with respect to the dollar might result in a further improvement in rankings and by extension, higher numbers of students looking to attend Trinity”.
In the case of what may happen in the future and whether the parity between the currencies will remain stable, Romelli explained that “a lot will depend on what happens to the invasion of Ukraine by Russia” and that “the reason why the euro has depreciated so much with respect to the dollar is for two main factors”.
“On one side, we have seen recently that the Federal Reserve Bank in the United States has increased”, he explained. “As an investor, if I want to invest in U.S. government bonds, I will now get a return on what is a so-called safe asset”.
He continued, “the other element that is leaving less investor interest in the euro area at the moment, which has a negative effect on the exchange rate, is the negative effects of the Ukraine invasion by Russia on the European economy”.
Romelli also added that if the invasion continues, the current parity will remain in the long run. “I expect that if nothing changes in terms of energy prices, probably I would not be surprised if in the next six to nine months. The euro dollar exchange rate will remain as parity.”
With this being one of the biggest economic events of this century, not having been seen in over 20 years, its effects will likely have an effect on not just the exchange rates of the two currencies, but also on the cost of living in the long run and the ability of students to pay their fees in the long run. With the current parity looking like it might be here for the long haul, it is certainly possible that some students will be keen to pay fees up-front if they can before this economic advantage wears off.