I received this question from one of our avid readers, regarding Student Loans:
If I apply for a loan, let’s say for $20,000 for the full course, what will it include?
How can I pay for my room rent, groceries, recharge, books, etc.? How much will these expenses come in a month?
Before continuing with this post, please read this article first: Facts about education loan payments.
I have also discussed previously about the cost of graduate education in the USA and how your place of study will have some effect on your monthly expenses.
So with that, part of the question on monthly expenses is already answered. Now, let me discuss about how to use the loan amount.
When you get your loan approved, banks will usually ask for your I-20, which will bear the amount listed for tuition, living expense, books, and others.
Banks in India will use that information as a proof for confirming your admission to U.S. universities.
While some banks will not issue loans less than the amount stated in I-20, majority of banks will issue the loan.
It is always better to get a loan approved for an amount at least equal to your total expenses. I-20 will list the expenses only for the 1st year of studies.
A master’s degree will usually take 1.5 years to 2.5 years to complete.
So, even though your parents can cover for your educational expenses, there is nothing wrong to get a loan approved for, let’s say, 15 to 20 Lakhs (India). This fund will be useful when applying for an F1 student visa.
A bank will issue 2 demand drafts (called as bank draft in the U.S.). That’s the case with majority of banks. The first demand draft will be issued in the name of the university and the other demand draft will be issued in your name.
- Total Student Loan Amount = Living expense + Tuition fees
Some banks, though, issue just one demand draft (bank draft) for the entire amount you requested, so it depends on the bank’s policies.
Once you reach the U.S., it would take only a few minutes to open a bank account in your name. You then deposit the demand draft.
- If your 1st year tuition fee = $15,000 ( University of Florida )
- Living Expenses = $5,000 ( Your Name )
I usually prefer to carry only my first semester’s fee with me, plus those covering my living expense.
Before your next semester begins, you can ask your parents to send the next demand draft for paying your college tuition fee. This would save you interest rate for around $7,500 as per our example for 5-6 months.