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Should I take a loan to attend a US University?

Should I take a loan to attend a US University?

We are often asked by students if it’s worth taking a loan to pursue their dream of studying in the United States.

After all, the US is the epicentre of western civilisation, home to Wall Street and Silicon Valley, and the dream destination for expats across the world. It seems like a no-brainer to invest in your American education, especially given how valuable those credentials can be.

However, the answer isn’t always as simple as that.

The short answer is that it depends on your circumstances, the college you will be attending, your intended major, and your plans.

In essence, what we are trying to calculate is what will be the Return on Investment (ROI) for pursuing an American Degree. If the ROI outweighs the cost, then the answer is a yes.

Also, in our equation, ROI is not simply a quantitative value, but has qualitative factors associated too.

So let’s jump into the variables. You’ve probably come across some of them earlier:

  • Intended Major - STEM vs Non STEM
  • Immigration* - 3 years OPT for STEM vs 1 year for Non STEM
  • Career Choice - Software Industry, Consulting, Finance, Academia
  • Expected Family Contribution (EFC) - how much $ can you contribute towards the degree
  • Cost of Living - Rural town vs Metropolitan, avg rent and supplies etc.
  • University - Broad ranking and prestige
  • Employability - regardless of career path, how strong is the particular department at your university in placing its graduates in their preferred life paths.

These are the broad variables you need to factor in. The weightage of all of these will depend on your situation.

Now, the chef’s recipe:

  • Evaluate the loan amount you will need to take. This is the first step.
  • Evaluate how soon you can pay it off, given job prospects + immigration status (more on this later)
  • Decide your comfort level with risk
  • Come to a decision

Each student’s dilemma is highly unique and the decision making needs to be personalized. So, how do you go about this?

  1. Do your own research - read up blogs, testimonials from websites, online forums etc but take everything with a grain of salt to understand whether you’ll be able to afford an education or not abroad.
  2. Talk to Alumni - this is the most powerful thing you can do! connect with 2-3 alumni from each university you are selecting between to understand their experiences and weigh them heavily. Ask them about job prospects to get a sense of what sort of opportunities you can confidently land
  3. Do some napkin math - Once you have a rough idea of the kind of job you could get post your degree, head over to https://www.glassdoor.co.in or levels.fyi or other such websites to get a broad sense of starting salary ranges. Here are our numbers. Please verify these independently as well:
  4. Software Engineer - $120,00-$150,000 base
  5. Consultant - $90,000 base + bonus
  6. Trader - $100,000 base + variable bonus ($10,000-$50,000)
  7. Banker - $100,000 base + variable bonus ($10,000-$50,000)
  8. Discuss with your family - Finally, have an honest conversation with your family after you have collected the facts and see where you stand.

As a general rule of thumb, our belief is with current employment prospects here’s a crude estimation:

  • A loan up to $100,000 can be comfortably paid off in 2 years by a STEM major at a Top 50 University intending to be employed in the software industry (given 3 years of work ex in the US, combined with high salaries even in India this is a comfortable range)

The qualitative factors you need to keep in mind are the fact that an American education degree tag is globally recognized and will open doors for the rest of your career. American college alumni groups are also the most active in terms of job opportunities and career ascension.

Most importantly, the quality of education you will receive will far surpass anything and make you a much better, well-rounded individual who will be able to thrive for the rest of their life.

However, we understand that finances are a daunting aspect. The final takeaway we want to talk about is how you should view your education not as a sunk cost but as an investment. So keep that in mind as you go about evaluating different colleges and choices - going for the cheapest option may not always be the best bet.

We hope this helps.

However, If you’re still confused after reading this we’ll do you one better. Reach out to us here and we’ll give you a 10 minute free meeting to help walk through your situation and let you know whether you should take the step or not.

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