Education loan for MS – How to finance your Masters – Part 1
The below image shows the application timeline for fall 2017 and most steps in the application process are going to remain the same for spring and fall 2018. If you zoom in, we are at step 10. Most of you are receiving admits currently (For those of you waiting. Our prayers are with you, we all hope that an admit is on its way). The next steps are to finance your education. Get an i20 and get an education loan for MS.
Read carefully; if you found GRE, SOP and the application process tiring brace yourself. Because you are not even at the halfway mark yet. The i20 is the first important official document that you will need to obtain. Moreover, let me make this very clear (Again let me make this extremely clear). Every document that you receive from now on, whether it is a postal receipt or an email. Make sure you guard it with your life . File the original copies in the chronological order. Your immigration document file is your first key to the United States ( I repeat. Guard it with your life).
The Chicken and the Egg.
In order to issue the i20 most schools ask for bank statements that show funds for the first year of expenses that are likely to be incurred. A sample i20 is sent to you asking for financial statements to be sent via postal mail. In some cases, the amount is specified along with the admission letter asking you to upload the documents in electronic format in the admission portal. Generally, the amount varies from $45000 -$90000 (Disclaimer: This is an estimated range, Private universities are close to the higher end of the spectrum and public universities are closer to the lower number. I am not trying to panic anyone)
Most of us are from middle class families and we do not have $45000-$90000 (Approx. 45-75 lakhs) in liquid cash. So we need to get education loans for MS.
That is when the chicken and egg problem starts. The Banks in most cases consider i20 as the official proof of admission to process the loan. I have roamed around asking close to 9 Banks and every bank turned me down stating that anybody can type and take a print out of the admission letter and ask for a loan. Even after showing the email and portal confirmation, they sent me back asking for the i20.
However, before we get around this problem. Let us look at the typical fee structure in a university and how your i20 or amount break out would look like. Let us take UCLA for example. (Because it is an expensive public school with living expense in California (read high cost of living))
UCLA expenses listed for first academic year (Yes you read it right 1 year not both years)
- Tuition Fees: $31,500 annually for non-California residents.
- Living Expenses: $21,100
- Total: $ 52600
In order to get the i20 you need to show an amount greater than what is shown here. A good thumb rule is 1.6 x the i20 amount. OOPS!!! soo much?? WELL THIS IS PROBABLY WHAT YOU ARE THINKING. THAT IS 85 GRAND ARE YOU KIDDING ME. My MS dreams will be shattered if that is the amount.
No, I am not kidding And No your dreams are not shattered. Again, do not panic. Read
Every single person who has gone through the admissions phase have come across the “Not enough money syndrome” In fact until you graduate and get a job in the US that is how you will feel.
So how did all the others and I show so much liquid money in the bank account. I can share my experience and few of my friends. All are good options and genuine options.
I am strongly against immoral and illegal options like going to an agent or using a consultancy to show money. Yes you will get the documents and the probably even the visa. One bad day is enough to get you barred from travelling to US. And that day might be your visa interview day. So never, use fake documentation or trust someone else when you can do it on your own. You may have relatives and friends who can help.
Many people show exactly the first year account and get through. However, during the visa interview if the visa officer questions how you will finance your second year. Many people answer confidently and clearly and get the visa, the people who start to panic when they hear this question are the ones in trouble; visa officer reads your body language and boom.
I pretty much had very less time to pool in the money. I got the admit by the end of February and it left with about 3 months. I went to CMU and the fee for a year was close to $83 K at a conversion rate of Rs 63.5, which is close to 53 Lakhs. And the fact is unless you are in top 1% of India’s population you don’t have that money at least as liquid cash in bank. This is what I did.
If you are working, save 40% the moment you know you are going pursue an MS: I started saving money the moment I started to prepare for GRE. I saved 20K per month almost close to a year
= 2.5 Lakhs.
This sounds very tough to do and it is. Many of us are not used to borrowing money and feel it is below dignity. But trust me the moment you tell people it is for sending you abroad to study. Especially if the University is renowned. People soften and lend you money for at least 3-4 months.
This is how I got my money
Two colleagues: 2 lakhs
Uncle: 2 Lakhs
Aunt: 2 lakhs
Sister: 2 lakhs
Parents PF : 3 Lakhs
= 11 Lakhs.
Tap into your parent’s network:
This helped me the most. And boy did it . Even after a month of begging to relatives and borrowing from them I had only 13.5 lakhs.
That is 40 lakhs short. So my father called every single person on his contact list.
For some reason my dad called, everyone in his contact list during festivals every year and wished them for no reason. Sometimes he called and talked to his friends simply asking them how their family was. This kind of rapport is what I believed helped me. If your parents are like this perhaps, you will get lucky too.
Dad’s friends and colleagues nearly contributed to 23 lakhs close to 20 people chipped in amounts between 50000 and 100000.
Now I was confident that I would make it.
I had 23 +13 = 35 lakhs in my kitty.
After 15, more days of borrowing from people. A friend of dad’s who owned a small business decided to lend 15 more lakhs as a donation, which would help him, avoid tax.
(Dad helped this friend a long time back with a small loan and helped him find a house in Chennai when the colleague was new to the city, 😀 what goes around comes around). This was very lucky. You might get lucky too. Some help that your parents offered someone long time ago might help you today.
Now I had 50 lakhs. We have two houses in Chennai. One we lived in , which was an apartment valued at ( 66 Lakhs) and another house with land valued close to a 100 Lakhs.
Therefore, my dad and I decided to take a short-term mortgage on the apartment we lived in for 15 lakhs. Our idea was to disperse this loan once I got the i20 so that I can get the actual education loan for MS.
Now I had 65 Lakhs in my kitty. = almost 100000 dollars.
Trust me this was not easy. Many times, it was embarrassing to ask people money. Nevertheless, people sympathize when you do well in studies. Very few people say no when you ask money to pay fee especially when they are educated.
Because I remember many times when my neighbor used to borrow money from my dad to pay school’s term fee and when he got his salary he used to pay back on time. Education is revered in India and people who you though might never help will come forward and lend money.
You or your parents network might have bank managers, Property loan lenders, people who own jewelry shops, small businesses, People who are already abroad who may be willing to give their bank statements. You never know unless you test the limits of your network. Moreover, trust me this is how most of us got the money to obtain an i20
Once I had $ 100000 in my kitty, I got the bank statement in the following format.
- Name of the account holder
- Relationship to the student
- Account type : Savings, fixed etc.
- Balance in local currency
- Current conversion rate (Example $1 = INR 63.5)
- Balance in Dollars
How many statement copies should I take? Take number of universities you applied plus 5
I sent the documents to the University and it took 30 days to get the i20.
End of first hurdle one.
I got the i20 I was happy but the next hurdle was getting the loan.
Because all the money I borrowed had to be given back eventually and I had to get a loan approved.
Please look out for the next blog to clear the second hurdle: You can click here to read the next blog
In the next blog I will talk about the options available to get education loan for MS. What are the interest rates. What are some important considerations etc.