Can You Really Get Rid of Student Loans by Leaving the Country?

how to get out of student loan debt

During the Vietnam War, it was estimated that about 40,000 American men dodged the draft and fled to Canada, leaving behind family, friends and the chance to ever return home without facing severe criminal penalties.

These conditions weren’t lifted until a decade later, when an official pardon from President Carter allowed all draft dodgers to return to U.S. soil.

In 2016, there’s a similar trend emerging: recent college graduates facing massive student loan debt are fleeing abroad to Europe, mounting a personal exodus to avoid paying off their loans.

The only problem, like those draft dodgers of the 1960s, is that doing so can spell major problems for their finances — and even their freedom.

How to get out of student loan debt: move overseas?

A recent VICE article detailed the phenomenon of students looking to leave behind their student loan worries by leaving the country, hoping that the consequences won’t catch up to them.

According to Adam Minsky, a student loan attorney quoted in the article, many borrowers leave because they may perceive more opportunities in another country, such as better paying jobs and a lower cost of living.

One borrower profiled in the article with $40,000 in debt believed his education should have been for free, but since he still owed money on his loans, fled the country. Another regretted attending an expensive private school and the $45,000 in loans it required, pulling up stakes to Germany to avoid the responsibility of paying them off.

Another student began paying her loans, but stopped after departing for Europe. “Once I moved abroad, I just stopped paying,” said “Zoe,” who was $31,000 in debt. “Once you move abroad, you just kind of turn off that whole part of your life off. [The loan providers] can’t touch you; you’re elusive. But they started calling my parents, my grandparents, my past employers. And I was just living my life in Europe, kind of oblivious to it,” she told VICE.

According to the article, if you’re a student loan borrower residing in another country, earning income from a foreign company, and not collecting U.S. taxes or Social Security benefits, loan companies or the government technically cannot pursue you.

But like grad Zoe, back home in the U.S., her lenders began coming after her family — just one of the many consequences you might face if you booked out of the U.S. to get away from your loan repayment duties.

Why you can’t escape student loan debt overseas

Consider some of these reasons why fleeing the country might not be a realistic solution to get rid of your student loans.

1. Your student loans won’t go away

Nothing will absolve you from your student loans or make them magically disappear, especially not moving to another continent. Interest will continue to accrue and your payments will keep racking up, overdue.

The only alternatives you may have for pausing payments is to seek deferment or forbearance.

2. Your credit will take a big hit

Overseas or at home, if you don’t pay back your loans, it’ll reflect poorly on your credit report and scores. That will make your efforts at taking out more loans, getting a new credit card, etc., difficult.

A late or missed payment once or twice might not make too big an impact on your credit, but take a one-way flight to Italy and abandon your loans altogether, and you might as well settle for a zero-digit credit score.

3. You may lose most of your U.S. financial privileges

Dodging your student loan debt may prevent you from taking advantage of some financial rights and privileges if you ever plan to move back to the U.S. after a stint in some far corner of the world.

If caught, the IRS may come after you for your unpaid debts. If you come back home and find a job, you might even have your wages garnished towards your loans, the result of tougher government statutes to keep borrowers accountable.

4. You may have to resort to using cash only

Leaving the country for some European paradise may sound good in theory, but in reality, you may find that you’ve traded your student loans for another tough financial situation.

According to Credit.com, you may need to stick to transacting with cash only in the EU. Establishing a credit history there is awfully difficult 1. because you’re not a European resident and 2. because you’ve got a boatload of student loan debt back home.

On top of that, will you have enough cash on hand to buy a home, make investments or establish residency? If you did, you might as well just pay off those loans.

5. Your family may have to shoulder your student loan debt

You may be lying on some beach in the Greek islands, thinking your student loan providers can’t touch you, but back home, your co-signers (if you have any) will be the ones responsible for paying back your debt.

Just like with any co-signed loan, lenders go after the next name on the contract; if you care about troubling your family this way, be an adult, stay home, and make those payments.

That’s your best, most mature solution to tackling major student loan debt. After all, you took out the loans and went to school, now you should use that degree to find employment, make a budget, and hack away at that debt balance. If you must relocate, don’t do it to escape your financial situation.

On the other hand, if you want to become a legitimate expat and find real employment overseas, do it the right way. Make sure you take the steps to obtain a visa, find a country with a reasonable cost of living, and a gainful income that allows you to experience another country, further your career, and pay off your debt responsibly.

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Published in Student Loan Repayment

  • jeyy

    This is just propaganda from the US student loan industry.

    It works. Many have been successful at doing it.