Studying abroad in England last spring was a dream come true for Ball State junior Lindsey Ahaus. Coping with the worsening exchange rate overseas, however, was not quite as enjoyable.
"The first time I went to the ATM in Staffordshire and took out 20 pounds, it still hurt to see that $38 came out of my checking account," Ahaus said. "Eventually, I learned to stop converting how much money I was spending in my mind because otherwise, I wouldn't have gone anywhere or eaten anything for the whole trip."
Over the past two years, the American dollar has lost nearly a third of its value against the British pound and the Australian dollar. The decrease in value has increased living expenses for study abroad students and driven up the cost of Ball State's overseas programs, Jim Coffin, director of the Center for International Programs, said.
The London and Australia Centers, the university's two most popular programs, cost about $9,000 two years ago compared with $10,500 now, Coffin said. While part of the increase can be attributed to recent tuition hikes, the devaluing of the American dollar has played a major role, he said.
"We haven't raised [tuition] at the same rate that the dollar is losing," Coffin said. "Otherwise, we would have had to raise the program by a third, which we haven't."
The pound, which used to equal $1.50, is now $2, Coffin said. The euro, a currency that has replaced the individual currencies of the 12 European Union nations, was worth 93 cents in 2001, but a euro today costs $1.30 -- a nearly 40 percent increase, according to fxtop.com.
The dollar that was worth 121 Japanese yen in 2001 is worth only 104 yen today -- a 14 percent decline in value.
"I don't expect the value of the dollar to get strong anytime soon," Cecil Bohanon, Ball State economics professor, said. Bohanon expects the dollar to decline even more against the euro, yen and pound over the next couple of years, he said.
"There are a lot of excess dollars out there, and the primary reason for that is the United States is making a huge trade deficit with the rest of the world," he said.
As the United States continues to import more than it exports, foreign investors have become less interested in American assets because of the decline in their rate of return -- how much they would earn from the investments over time. Other countries expect the dollar to continue to lose its value so they raise their prices to protect their investments, Bohanon said.
Imports also become more expensive because the devaluation of the dollar means a decrease in its purchasing power. This leads to a lower standard of living, Bohanon said.
Attracting more foreign investors to American assets could help take away the trade deficit, but the question is whether foreigners will actually continue to invest, he said.
"Most people don't think they will," he said. "That's the point."
Coffin said the decline in the value of the dollar has not affected enrollment in Ball State's study abroad programs. About 250 students are studying abroad this semester, which is typical of past semesters. In fact, the number of students interested in studying overseas is rising, he said.
Despite the increase in cost, Ball State's programs are still a good bargain because traveling overseas independently would cost twice as much, Coffin said. However, the center is still working to provide the best experience for students, he said.
"We're going to have to always improve the quality of our program so students will want to go, so that's probably our main challenge," Coffin said.
Less expensive three-to-five-week summer programs, which range from $2,000 to $4,000, are also available for students, Coffin said.
But Ahaus said the cost of studying abroad should not discourage students who are seriously interested, especially with financial aid loans, scholarships and grants available.
"If it is a little more expensive, well, you get your money's worth in experience and personal growth," she said. "Those things the exchange rate will not affect."
Read More
Three Air Jam teams take home the win
October 12, 2012Nineteen teams shimmied, shook and flipped for a sold out John R. Emens Auditorium on Thursday night during the 25th annual Air Jam.
Bill Clinton Speaks at North Central High School
October 12, 2012Former President's Speech Could Have Effect on State Senate Race
