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I'm planning on travelling to another country to meet a potential PhD advisor (we're both in Europe). He has said his lab will cover the expenses.

Is this usual practice? I'm from a country where standard etiquette when offered money (or indeed, anything) in a circumstance like this is to politely refuse the offer multiple times, even when they insist, and then eventually agree while making clear you feel terrible for accepting their money. Agreeing immediately would be seen as extremely rude.

I'm aware it's almost certainly the lab's budget that will be funding my visit and not coming out of the guy's own pocket, but still, I don't really know what to say, a standard thank you still feels bad to me, but maybe that's just from my culture.

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    In which country is the lab? – FuzzyLeapfrog Jan 31 '17 at 21:50
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    Being offered expense reimbursement for an onsite visit is definitely normal in private industry and in "campus visits" for graduate schools and professors alike, and your potential advisor is almost certainly not offering you money out of his personal pocket, so I highly doubt you need to demure in any way. But I'll leave it to people more specifically familiar with Europe to confirm this is true there as well. – BrianH Jan 31 '17 at 21:51
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    Be careful here. I'm in Germany and we usually offer reimbursement like this. If you refused, it would (i) seem extremely weird to us and (ii) we would accept your refusal. You'd end up paying the trip yourself and possibly lower your chances. – Roland Feb 1 '17 at 10:20
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I do not think the etiquette you are talking about applies here. You need to go there in order to ensure compatibility between you and your potential future advisor. This is neither a gift nor a present; it it a business related trip and I do not see a reason for not agreeing to this.

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    Indeed. I have invited students for research and possible collaborations (they were known to me by their work). Such an invitation is very well covered by perfectly professional interests (unless you have strong reasons to assume ulterior motives, but it doesn't sound like it). – Captain Emacs Feb 1 '17 at 0:03
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Be glad for the offer and accept it. The advisor's LAB will cover the expenses, not himself. It is possible that he or his team have a budget where things like this are included. He probably has money that can be spent only on research related stuff, like funding the stay of a visitor or future research collaborator.

Refusing funding is unjustified, unless you have funding of your own. But even if that's the case, he made the offer so just accept it. A polite thank you is enough.

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