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.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|