Note: This is going to be a very long and detailed post. I have tried to make things as simple as I could here, so I've had to make certain assumptions, one of which is that you don't have an on-campus job, or a scholarship of any kind, and that you get your first ever job after your MS, which means you'd be unable to pay off any part of the loan on your own during your MS. Also, since I've tried to make things simple, but they're still quite complicated, do read through the entire post before asking me any questions, and do NOT ask me any questions about how much you'd save if you get an internship/on-campus job/scholarship/tree with golden leaves, and do not ask me questions about how much money I make. Any such questions would not only be ignored, but would also be replied to in the most unflattering of ways.
Now that the disclaimer is out of the way, for the actual post itself:
Repaying a loan isn't just about returning the X amount to the financial institution you borrowed it from. You also need to repay the interest, obviously, and you need to do all that while earning enough money to pay off your other obligations and to keep some savings handy, in addition to paying for your living expenses and money you need for such things as eating out, going to movies, traveling, sight-seeing, etc.
Let me tell you my experience, based on the fact that I came to the US over 7 years ago, and have lived here ever since. My first job was here, and now I am a resident for tax purposes (I'll come to that later), which affects your income in certain ways. Now, let's start at the very beginning. I came to this country to do an MS, at a public school, where the tuition (when I started) was about $7.5k per semester. That would make just the tuition for 4 semesters $30k. Now, I lived in a place that was not expensive to live in, and I hardly paid about $230 as rent each month. People who end up going to expensive places and/or bigger cities would need to pay much, much more than I did - as a comparison, living in NYC would cost at least $1k per month, and even then you'd mostly not be able to live in Manhattan, or alone. You'd be living like in a can of sardines, and even then you'd pay much more than I did, for a fraction of the living space I got. Anyway, so in my case, I had spent close to $6000 just on living expenses, over a two year period. Add the food expenses, which would most likely be around $400-500 or so (assuming you eat out very rarely or not at all) per month, which would make those come out to be $12000 for two years. Added together, that figure becomes $48k for two years. Add to that the travel expenses, plus added expenses such as for clothing, other necessities, and luxuries once in a while, as well as eating out, going to different places, traveling, concerts, etc., and let's assume the round figure of $60k for two years. And that's a very conservative estimate - if you're at a private school and/or in a big city, the expenses can easily hit twice that amount. So for calculation purposes, let's assume you need to spend $100k on your MS, over a two year period.
Now, for our calculations, consider the fact that you took a loan only for the second year expenses, which is a loan of $50k. That amount, converted to INR as per today's exchange rates, comes to about Rs. 33 lakhs. One of the banks I know of which gives out such large loans, is SBI, which (unless I'm mistaken) lends up to INR 30 lakhs. Assuming that's correct, and an interest rate of somewhere around 13%, you'd need to pay back somewhere between $65k-70k (ballpark figure). If you're interested in working out the specifics for yourself, use
this link from the SBI website. Once you come up with the total repayment figure, you'd need to plug that into
this repayment calculator, to come up with the EMI amount. I chose that repayment calculator because many (if not most) people choose to or aren't able to start repaying their loans immediately from day 1. If you're able to do so, good for you, you can use
this repayment calculator instead. For assumption's sake, and because I took a loan with a 3-year moratorium period (and because I'm using my own experience as an example), let's use the same here. 3 years, including 2 for the MS itself, and then 1 more for the time needed to get a job and be stable enough to be able to start repaying the money you owe.
Considering a total repayment amount of $68k, if you want to pay it all off in 2 years, you want to be able to send home about $3000 each month. But, keep in mind, that for most people this is quite impossible to achieve - because of not only their own expenses, but also other things you'd probably need to spend on after you graduate, such as if you get a car, or when/if you need to move to a different place. Now, you're right, the amount you get to save up each month (and hence are able to send home) is highly dependent on your location and salary, as well as on your own living standards, expenses and other obligations. In my case, I was about to save up about $1.5k a month, on an average - don't ask me how much money I made back then or make now, because that's a very rude question to ask. I can, however, tell you, that in general, if you stay in a big metro, such as the bay area, expect to spend somewhere between $800-1400 a month at least, depending on the place/apartment/location, etc. in a 3-bedroom apartment. Rents in big cities such as NYC, Boston, Philly, DC, Chicago, Los Angeles, Seattle, etc. are probably going to be about similar, with level-2 metros such as Charlotte, Austin, St. Louis, Kansas City, etc. being somewhat cheaper (expect to spend about $600-800 per month on rent for one bedroom in these places). Anyway, so if you earn $80k a year - not everyone lands a $100k per annum job right out of school, so if that's what any of you readers are assuming/expecting, snap out of it - taxes would take out somewhere around 30% of your annual income on F-1 visa status. Assuming you are on OPT the first year after you graduate and that you don't have the OPT STEM Extension, you'd pay the following taxes: Federal income taxes, state income taxes as applicable and local/county/city income taxes as applicable. On F-1 status, you do not need to pay SS/FICA taxes. But, once you transition to H-1B status, or if you complete 5 years of staying in the US (on any visa status), you automatically transition to being a resident for tax purposes, which means you pay SS and FICA taxes as well in addition to federal, state and local income taxes. At that time, expect to spend about $250-450 more each month on those taxes. For simplicity purposes and for the sake of our calculations here, let's assume taxes of $1500 a month, including federal, state, local, social security (SS) and medicare (FICA) taxes.
Now, coming back to the earlier example about you earning $80k a year, which comes out to $6667 a month. Minus taxes of $1500, that's $5167 a month. Taking out a rent of $1000 and other expenses of another $1000, you're left with about $3000 a month. Then, assuming you have a car, you'd need to pay for the car loan EMIs, as well as insurance for the car, in addition to health insurance for yourself (if your employer doesn't pay for it), so you're looking at an amount of about $2500 that you can dip into. Assuming you don't travel or spend a lot of money on eating out/partying/etc., you can save a part of that money, say $500 or $1000 a month, and send the rest back. So, assuming you send home about $1500 a month, you'd pay the loan off in about 4 years, give or take a few. And, keep in mind that's assuming a sunny-day scenario, assuming you have no unforseen expenses, no loss of income and also on the assumption that all the above figures are accurate. If you earn less than $80k a year, or if your expenses are more than the figures given above, then the amount of money you get to send back home would be less than $1.5k, so the time you'd need to repay your loan might increase. Similar caveats apply to loans of higher principal amounts, or higher interest rates, but I hope you all get the general idea of how loan repayments work for most people.
P.S.: While we're on the topic of costs and savings and expenses, also go through
this excellent thread that offers a lot of insight on a major area where you might (potentially) end up spending a ton of money on during your stay here in the US - healthcare. Healthcare, as some of you readers might know - is messed up and is ridiculously expensive in this country, but not a lot of people think about it and its associated costs until they actually fall sick or get into an accident of some sort, or have a health problem that their insurance does not cover fully - by which time it's too late. That's what I meant by "sunny-day scenario" in the paragraph above - all the figures above assume that you don't fall sick unexpectedly, have good medical coverage (including not just regular health insurance, but optical/vision and dental insurance as well), and don't have unforeseen additions to your expenditure or any major life-events that necessitate any sudden spikes in your expenses.
P.P.S.: Realized I'd never really answered your actual question itself, @[piy9]. It took me about 2.5 years to pay off my loan in full, but again, keep in mind that my expenses were lower than most peoples', I was in a state school, and I actually paid only one semester's fee from the loan amount. YMMV.
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How many years did it take you to pay back your loan?
