How to Pay International College Fees from India: Complete Guide to Foreign University Payments

Your child got into a university abroad. The offer letter is sitting in your inbox, and the fee deadline is three weeks out. Now you're stuck googling the same three questions every parent asks: how much money can I actually send, will the tax office take a cut, and which bank or forex company won't bury me in charges.

RBI's Liberalised Remittance Scheme still lets resident Indians send up to USD 250,000 a year for tuition and living costs, and LuLu Forex as an authorised dealer. But the tax treatment changed twice in two years, and most articles online are still quoting the old numbers. Here's what applies right now, and how LuLu Forex handles fee transfers for families sending money abroad.

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How much can you legally send abroad for college fees?

The cap under the Liberalised Remittance Scheme (LRS) is USD 250,000 per resident individual, per financial year. That covers tuition, hostel fees, exam fees, and living expenses. If the total cost of the course runs higher, you'll need documentation showing the source of additional funds, usually an education loan.

This limit hasn't moved in years. What has moved is the tax bill attached to it.

What's the actual tax hit now?

Tax Collected at Source (TCS) applies once your remittances under LRS cross a threshold in a financial year. Two changes matter here:

1. The TCS-free threshold went up. The Ministry of Finance raised the threshold for collecting TCS on LRS remittances from ₹7 lakh to ₹10 lakh, effective April 1, 2025. Anything under ₹10 lakh in a financial year: no TCS.
2. The rate above that threshold dropped again in Budget 2026. The finance minister cut the TCS rate on education and medical remittances under LRS from 5 percent to 2 percent. So if you're self-funding and remit more than ₹10 lakh in a year, you're looking at 2%, not the 5% or 20% figures still floating around.

Funding it through an education loan changes the math entirely

If the remittance comes from an education loan taken through a specified financial institution under Section 80E, TCS doesn't apply at all, regardless of the amount. This is the single biggest lever families have to manage cash flow, and it's underused simply because most people don't know the exemption exists.

Also Read: Complete Guide To TCS Changes

TCS isn't a penalty either way. It's adjustable against your tax liability and comes back to you when you file your ITR, but that's a refund cycle, not free money sitting idle for a year.

How does the money actually move?

You've got three routes in practice:

• Bank wire transfer, through your own bank's forex desk. Usually slower, and banks tend to mark up exchange rates without saying so upfront.
• Authorised forex companies, like LuLu Forex, handle the transfer as an RBI-authorised dealer with published, transparent rates.
• Forex/education payment platforms, useful for smaller institutions but often layer in their own service fees.

What documents do universities and banks actually ask for

• Admission or offer letter from the university
• Fee invoice or fee structure document, in the currency being remitted
• PAN card
• Form A2 and LRS declaration (your remitting bank or forex company handles this with you)
• KYC documents

Missing any one of these is the most common reason a transfer gets delayed at the last minute, right when the payment deadline is closest.

Where families actually lose money or time

• Waiting until the week of the deadline. Exchange rates move daily. A rate locked two weeks early can be meaningfully cheaper than one booked in a panic.
• Not checking for intermediary bank charges. International wires often pass through a correspondent bank that takes its own cut, on top of what your forex provider charges.
• Assuming a credit card payment is automatically compliant. It may still fall under LRS reporting requirements depending on the amount and purpose.
• Losing the TCS certificate. You need this to claim the credit back when filing your return.

Conclusion

The LRS cap is unchanged at USD 250,000 a year. The TCS-free threshold is ₹10 lakh. Above that, self-funded education remittances are taxed at 2%, down from 5%, and loan-funded remittances through a specified institution are exempt entirely.

Also Read: Complete Guide for GIC Payments to Canada

LuLu Forex handles outward remittances for education as an RBI-authorised dealer, with live exchange rates, transparent pricing, and staff who deal with fee transfers daily rather than occasionally. If you're sending money abroad for a child's education this year, get the rate locked and the paperwork right the first time.

FAQs

1. How much money can I send abroad for my child's education without extra tax?

Up to ₹10 lakh per financial year under LRS with no TCS. Beyond that, 2% TCS applies for self-funded education remittances, unless the amount comes from a loan through a specified financial institution, in which case it's exempt.

2. Is TCS on foreign remittance refundable?

Yes. TCS collected is adjustable against your income tax liability and shows up in Form 26AS. You claim it when filing your ITR.

3. Do I need an education loan to avoid TCS?

Only if you want to avoid TCS entirely on amounts above ₹10 lakh. Self-funded remittances above that threshold are taxed at 2%, not exempt.

4. Can I pay university fees directly through an international credit card?

It's possible for some institutions, but it may still count under LRS depending on the amount and purpose, and doesn't always offer the best exchange rate. A direct remittance through an authorised dealer is usually cheaper and cleaner for documentation.

5. What documents does LuLu Forex need to process a fee transfer?

The university's fee invoice, your admission letter, PAN, and standard KYC documents. The Form A2 and LRS declaration are handled as part of the transfer process.

6. Is LuLu Forex authorised to handle these transfers?

Yes. LuLu Forex is an RBI-authorised forex dealer with over a decade of experience handling outward remittances, including education payments, for families across India.