I think most of you like to know answer to this question
How long would it take to pay off your student education loan of $50,000 as an international student?
I selected $50,000 for following reasons
- Realistic cost of getting an education in USA from an average cost university
- Rounded figure
- Easy for calculation
Salary and Savings
We can’t calculate the savings without comparing savings with salary and cost of living.
I’m going to take a city with low-cost of living. you can do the math for cities with higher cost of living.
Cost of Living
- Apartment Rent – 2 bed/2 Bath shared by 2 – About $500 per month
- Utilities – $175 max
- Electricity – $25
- Gas – $25
- Internet – $25
- Phone – $50 to $100
- Car – $600 Max
- Car Loan Payment – $400 (if new car)
- Car Insurance – $50 to $100
- Car Gas – $100
- Food and Living – $500 max
- Food – $300 to $500 (depends on your eating habits)
- Living – $200 (personal care, shopping, etc)
If I missed other expenses, add them in the comment.
- Total Expenses – About $1500 per month
This is rough estimate and cost vary depending on individual.
For an entry level engineer where cost if living is cheap, you can expect salary to be around $50,000 per year.
With $50,000 per year, you can expect take home salary of $3000 per month.
- Savings – $3000 – $1500 – $1500
- Savings per year – $1500 * 12 = $18,000
- Number of years to pay $50,000 = $50,000/$180,00 = 2.77 Years
If your take home pay decreases or expenses increases, it will take longer than 2.77 years to pay the student loan.
I haven’t taken loan interest payment into account.
Adding loan interest payment, you can add another 1 to 2 years.
So, plan to pay the loan within 5 years.
What do you think about this calculation?
Can you share your savings, loan amount and salary. We can have an interesting discussion.