Living Abroad with Student Loan Debt: Everything You Should Know

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Whether you’re planning to wander the streets of Paris or haggle in the night markets of Hong Kong, moving abroad could be an unforgettable and life-changing adventure.

But if you’re saddled with student loans, you might be wondering, “Can I move to another country with student debt?”

The answer is: absolutely. As long as you get your finances in order before you leave the country, relocating overseas is feasible, even with college debt.

In fact, not only do student loans not have to stand in the way of your dreams to explore the world, but moving somewhere with a low cost of living could actually help you pay them off faster.

So, what financial steps do you need to take before packing your bags and heading off across the globe? Here are eight tasks to tackle to help keep your finances sound, no matter where you go.

1. Update your contact information with your loan servicers

Before leaving the country, make sure your loan servicers have your most up-to-date contact information. If they’re sending letters to an old address or defunct college email, you could miss important information about your loans.

While you don’t have to share an international mailing address, try to provide one that’s still accessible to you (like your parents’, or an accommodating friend’s, home address), and double check that your loan servicers have your current email.

Along with updating your contact information, make sure your online accounts are up and running. Write down any usernames and passwords so you can easily manage your loans online from wherever you are in the world.

2. Review the details of your student loans

Once you’ve tracked down all your student loan accounts, familiarize yourself with the details of your loans. Figure out how many you have, how much you owe and what your interest rates are.

Once you see how much you owe, use a student loan calculator to estimate your long-term costs. It’s important to be aware of how much interest will accrue as you set up a plan to handle the debt while you’re out of the county.

For instance, you might find your monthly payments are too burdensome, in which case you could switch to a new repayment plan. Whatever your situation, learn the ins and outs of your loans so you can come up with a strategy for repayment.

3. Choose the right repayment plan for your situation

Once you’ve studied your loans, you may decide you want to make changes to your repayment plan.

Most federal student loans automatically go on the standard 10-year plan with fixed payments. If this works for you, you can simply “set and forget” your payments and pay off your debt over a decade. But if you have more room in your budget, you could schedule extra payments toward your loans to pay them off faster.

On the other hand, if your payments are too burdensome to handle while you’re abroad, consider reducing them with an income-driven, extended, or graduated repayment plan. Although these plans will cost you more interest over the long run, they could offer the relief you need in the short term.

And if you’re making money from a foreign employer, an income-driven plan might even reduce your student loan payments down to $0. You could potentially pay nothing each month without going into default. And if you keep working abroad, you could potentially get loan forgiveness after 20 or 25 years.

Note that these plans are only available for federal student loans. With private loans, you’re often stuck with the plan you chose when you borrowed, typically between five and 15 years. Some private lenders let you pause payments through forbearance or deferment if you run into financial hardship, but you probably can’t change your plan unless you refinance your debt. (More details below on refinancing.)

4. Set up autopay on your student loans

Once you’ve selected the right repayment plan for your student loans, consider setting up autopay on your accounts. When you permit autopay, your loan servicer automatically deducts your payment each month from your bank account.

As long as you have enough money in your account, you won’t have to worry about missing a payment. What’s more, autopay comes with another nice perk — many lenders knock about 0.25% off your interest rate if you sign up for it.

5. Get your bank accounts in order

If you’re working for a foreign employer, you’ll likely need to open a bank account in another country. But your loan servicer won’t necessarily be able to accept student loan payments from an international account.

If your loan servicer only withdraws from U.S.-based bank accounts, you’ll need to set up transfers between your international account and your home account. If possible, set up automatic biweekly or monthly transfers, so you won’t even have to think about the transaction. Since the money might take a few days to go through, make sure to schedule the transfer several days before your student loan payment is due.

Find out if your international and home banks charge any fees for the transfer, and look for a bank with minimal costs. When transferring your money, remember to include these extra fees in your calculations, so you don’t accidentally overdraw your account or come up short on your student loan bills.

6. Don’t miss payments on your loans

Setting up autopay will help you avoid missing payments, but you might be hesitant to permit it if you have an unsteady income. Even if you don’t allow automatic withdrawals, try your best not to miss payments when you move abroad.

Although your student loans might feel far away when you’re bar-hopping in Buenos Aires or camping in the Australian outback, the consequences of missing payments could still find you.

For one thing, letting your student loans fall into delinquency or default will cause long-term damage to your credit score. Although your U.S. credit report doesn’t matter that much when you’re in another country, it could make it difficult to rent an apartment, buy a home, or take out another loan if and when you return to the U.S.

Defaulting on federal loans could lead to garnishment of your wages, tax refund and Social Security benefits — plus, missing payments on your private student loans could even lead to you getting sued.

So even if you want to forget about your student loans while you’re away, avoid the temptation to do so. Not only will your debt continue to grow, but defaulting on it could make your life way more difficult than it needs to be when you go back home.

7. Explore the option of student loan refinancing

If you’ve got decent credit and a steady income — or can apply with a cosigner who does — you might also consider refinancing your student loans before you leave the country.

Through refinancing, you can adjust your monthly payment and choose new repayment terms, even if you have private student loans rather than federal ones. You might choose a shorter term to speed up repayment, or you could select a longer term to lower your monthly bills and give yourself more breathing room while you’re setting up your new life abroad.

Not only could refinancing let you pick a plan better suited to your budget, but it could also potentially get you lower interest rates. By lowering your interest rate, you could save money on your loans and perhaps even pay them off faster.

Refinancing also lets you combine multiple loans into one, so you only have to deal with a single bill each month. Simplifying repayment like this could make your student debt easier to manage from another country.

But while refinancing has a number of benefits, it does come with a potentially major drawback: Refinancing federal student loans makes them ineligible for federal protections. If you refinance federal loans with a private lender, you’ll lose access to income-driven plans, federal forgiveness programs and other federal loan perks.

So make sure you don’t need any of these federal protections before refinancing, or the sacrifice might not be worth any advantage you’d get from refinancing with a bank, credit union or online lender.

8. Consider how your destination’s cost of living will impact student loan payoff

Moving to another country with student debt presents some challenges, but there are also situations where living overseas can be a savvy strategy for paying your loans off faster.

If you choose a country with a low cost of living, for example, you could seriously slash your living costs. As a result, you’ll have a lot more room in your budget to pay off your loans — you could even make extra payments to pay them off ahead of schedule.

Consider the difference between Chiang Mai, Thailand, and New York City, for example. In Chiang Mai, you could rent a centrally-located one-bedroom apartment for about $343 a month, according to cost of living comparison site Numbeo. In Manhattan, that same sort of residence would cost around $3,149. In fact, the same site estimates that rental prices in NYC average 759.67% higher than in Chiang Mai, with restaurant prices 360.58% higher.

Of course, these two cities have major differences, and your salary might be proportional to your cost of living if you have a job with a local employer in your new country. But if you’re able to work online for a U.S.-based company, you could leverage that differential to crush your debt quickly and save money.

Everyone’s situation will be different, but lowering your cost of living by moving abroad could actually help, rather than hinder, your student loan payoff.

Student loans don’t have to stand in the way of living abroad

You can definitely still move to another country with student debt. As we’ve shown, going abroad could even help you meet your financial goals. But before you leave the U.S., make sure to get your financial situation in order.

Importantly, ensure your student loan servicers know how to contact you, and get your student loans on the right repayment plan for your situation.

If your servicers can’t withdraw from your foreign bank account, set up automatic transfers to your domestic one, while being mindful of fees and the time it takes for your money to move from one bank to another.

Although you’ll have to do some work in the beginning, soon you’ll be able to more or less forget about your debt while you fill up your passport with stamps, one exciting new destination after another.

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