What You Should Know About Living Abroad With Student Loans

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living abroad with student loans

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Living outside the U.S. can be an amazing experience, but it presents its own challenges when it comes to student loan repayment. Before you pack your bags, you need to have a plan in place.

As long as you’re prepared, your loans don’t have to stand in the way of your travel dreams. You can live abroad and still stay up to date on your student loan bills.

Here’s what you need to do with your student loans before getting your passport stamped.

1. Set up autopay on your student loans

The best way to ensure you don’t miss a student loan payment is to set up automatic payments. You can typically set autopay up online by signing into your account on your loan servicer’s website.

Some loan servicers even offer a 0.25% interest rate deduction for setting up autopay. You’ll just provide your account and routing number, along with the name of your bank.

Every month, the loan servicer will withdraw money to cover your student loan bill. And you won’t have to worry about sending a check overseas or missing a due date.

2. Connect an international bank account to your home account

Besides setting up autopay, you also need to ensure you have the funds to cover your student loan payments. If you’re making money abroad, you might be using an international bank instead of your home bank.

Some banks, such as Chase and CitiBank, have locations all over the world. But others are limited to the U.S. and charge substantial fees for foreign transactions. To avoid withdrawal fees and access your funds abroad, you might want to set up a new account with an international or global bank.

After you’ve set up autopay, your student loan servicers will still withdraw from your home account. So make sure to link your new international account with your home bank. Check that your U.S. bank account accepts electronic transfers in foreign currency from foreign banks.

Set up automatic transfers once a month to your U.S. account to cover student loan payments. And since the process may take some time to figure out, put a cushion of savings in your U.S. account. That way, you won’t run the risk of missing a student loan payment while you set up cash flow back home.

3. Consider refinancing your student loans

If you have multiple student loans, it could be helpful to refinance with a private lender. Refinancing combines your various loans into one new loan. You can choose a different repayment term and may score a lower interest rate, too.

With a lower interest rate, you could save thousands of dollars on your student loans. You could choose a shorter repayment term to get out of debt fast. Or you could extend your term, so you don’t have to funnel as much money to your student loan payments each month.

Keep in mind that when you refinance federal student loans, you lose access to federal repayment and forgiveness programs. If you think you’ll need an income-driven plan as an expat or after you return home, refinancing isn’t the best option for you.

If you have a steady income and solid credit, refinancing could be a good option. Be sure to research several lenders, though. Some refinancing companies, such as CommonBond and Citizens Bank, don’t work with borrowers who are living in another country.

They require U.S. residency to apply, so you’ll need to provide a U.S. address. And Citizens Bank also needs to see income from a U.S. company or organization.

Other lenders, such as SoFiLaurel Road, and LendKey, will work with you if you’re already abroad. Laurel Road allows you to apply with a foreign address and international income. And SoFi will help you verify foreign-earned income as long as you can provide a permanent address in the U.S.

LendKey will also accept proof of employment abroad as long as you’re still paying taxes in the U.S. If you’re interested in refinancing and already living internationally, speak with a lender about your plan of action.

And if you haven’t left yet, it could be easier to start the process before you fly off to your new destination.

4. Consider federal loan consolidation

Besides refinancing, federal student loan consolidation could also be a smart financial move before you relocate. This type of consolidation applies only to federal student loans. It combines your federal loans into one new loan.

Your new interest rate will be the weighted average rate of all your loans rounded up to the nearest one-eighth of a percent. Even though federal loan consolidation doesn’t lower your interest rate, it does simplify your monthly payments.

So instead of having to track multiple loans, interest rates, and servicers while you’re living abroad, you only have to deal with one. Handling your payments from another country can be confusing enough. This type of consolidation could be just the money move you need to make things less overwhelming.

5. Learn about income-driven repayment options

If you’re struggling to make monthly payments, you could qualify for an income-driven repayment plan. These plans extend your student loan repayment terms to 20 or 25 years and lower your monthly payment in the process.

And if you’re making money in a foreign currency, an income-driven plan could substantially lower your monthly bills. That’s because an income-driven plan typically reduces your monthly payments based on your adjusted gross income (AGI). Your AGI is the amount of income you report that’s subject to income tax.

But if you’re making money abroad, your AGI could be close to zero. According to the IRS, U.S. citizens living internationally could be eligible for the “foreign earned income exclusion.” This allows you to exclude income earned abroad from being taxed in the U.S.

As a result, your payments on an income-driven plan while living abroad could be extremely low. Before you get too excited, though, remember that low payments mean you’re barely scratching the surface of the principal or interest.

You could end up with a mountain of interest from all those months of low payments. Of course, the remaining balance could get forgiven — but that will take 20 or 25 years, depending on your plan.

Before switching to an income-driven repayment plan, make sure you’re aware of all the implications and speak with a student loan lawyer or your loan servicer.

6. Avoid going into default on your student loans

When you move abroad, it’s easy to get caught up in a whirlwind of adventure. You’re busy adjusting to a new culture and setting up a new home. With everything else going on in your life, you may be tempted to forget about your student loans.

But you can’t escape student loan debt by moving overseas, and defaulting on your loan payments has long-term consequences that are difficult to shake off.

For one, defaulting can completely tank your credit score. A poor credit score makes it difficult to buy a home or take out another loan in the future.

Plus, the government can garnish your wages and even your Social Security benefits. If and when you move back to the U.S., you could face severe financial setbacks.

If your student loans are a huge burden, take steps to refinance or get on an income-driven repayment plan before you leave. By lowering your monthly payments and setting up automatic payments, you’ll stay on top of your bills without having to stress about them.

As long as you take proactive steps before you move, you won’t have to worry much about your student loans while you’re away. You can enjoy a life of travel while secure in the knowledge you’ve taken care of your student loan responsibilities.

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. 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.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.