As junior Becky Clark walked away from London’s Heathrow Airport last spring with only £40 to show for the $80 she had exchanged Becky was faced with the same truth as many other international program students traveling to Europe: the dollar just isn’t what it used to be.
For much of the later half of this decade the value of the dollar has fallen against European currencies causing some IP students’ savings accounts to dwindle during their time abroad. Since 2002 the dollar has depreciated nearly 31 percent against currencies of other industrialized nations such as the pound and the euro according to the Federal Reserve Bank of Cleveland Ohio. This is due in part to the United States’ period of low interest rates compared to those in Europe its widening trade budget deficits and the credit crisis.
This depreciation of the dollar results in foreign goods becoming more expensive for U.S. citizens which is an issue for students traveling abroad to countries that use the pound or the euro. In the past two years the dollar value has dropped as low as $2.06 for every pound and $1.60 for every euro according to msn.com. However throughout this period of the dollar’s low international purchasing power Pepperdine’s international programs have “weathered the economic storm quite well wrote Dr. Charles Hall, dean of International Programs, in an e-mail.
With both Heidelberg and Florence programs operating in euro-based countries, and the pound as the currency in London, Hall said Pepperdine keeps a close watch on these currencies in respect to the dollar, as their fluctuations impact both students and the programs as a whole.
Despite the problems that stem from currency exchange differences, Pepperdine has not yet made any significant cuts to student activities or program features and has done its best to maintain the quality of its different programs, Hall wrote. According to Hall, the only significant change is that Pepperdine has asked its programs to take a more active approach in conserving energy and extra spending.
We have asked the programs to watch the expenses on extra things like final banquets at the end of the year wrote Hall. We are urging all the programs to find ways to save on utilities like turning off lights when you leave a room not being wasteful with paper goods watching water usage – things that we should be doing anyway.”
Pepperdine has protected IP through risk management procedures that offset the harm of fluctuating currencies.
“The university has been very good about buying foreign currency when the dollar is strong to insure stability during times when the dollar is weak Hall wrote. In addition IP tries to pay as much of its expenses in U.S. dollars to avoid the exchange.”
Through these actions the university has not yet needed to ask its programs to make any major cuts.
Although low dollar values put an exceptional strain on personal budgets IP students are still able to make the best of the situation. For example junior Matt Yarborough said that although the weak dollar put strains on his budget during his time in the Heidelberg program last year it ultimately made for a richer experience.
“The negative thing was that I had to be selective in the places I traveled meaning I chose to go to cheaper places in Eastern Europe Yarborough said. The good thing was it opened my eyes to a different world and ultimately I liked the way it went.” Junior David Cotton shared a similar experience during his time in the Florence program last year.
“Although managing expenses did suck it made for good stories” Cotton said. “I got a European experience from a student’s perspective and a student’s budget which will only happen once in a lifetime.”
Currently the dollar is appreciating in value against other currencies as major international economies experience a slowdown similar to the United States.
Although this is good news to future international students Hall said he wants to remind them “it is still too early to celebrate this favorable shift. There are simply too many unknown factors that could quickly change the strength of the dollar.”