How to Pay Off Your Student Loans by Teaching English Abroad

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Carrying student loan debt can feel very limiting. You might dream about traveling the world, but your monthly student loan payment keeps you chained to the job that allows you to avoid defaulting on your debt.

But what if there was a way to have your cake and eat it, too? Teaching English abroad offers college graduates the opportunity to travel, while minimizing their expenses and still paying down their student loans.

Here is what you need to know about making money while teaching English abroad, including:

Not all teaching positions are created equal
Qualifications and startup costs
Cost of living while teaching English abroad
How to pay $0 on your loans: Foreign Earned Income Exclusion
Is teaching English abroad to pay off your student debt right for you?

Not all teaching positions are created equal

There is demand for native English speakers to teach the language all over the world, but the amount of money you will earn depends on where you go, according to the International TEFL Academy, a teacher training program. Here’s what the program found:

  • Foreign English teachers in Europe and Latin America can generally expect to earn enough to live comfortably, with money left over for travel and other interests. However, you may not be able to save a lot, so if you have large student loan balances, you may not want to teach in those regions.
  • Expat English teachers in Asia can typically save between 30% and 50% of their monthly salaries after accounting for living expenses and basic travel/fun money. The amount of savings depends on the country. For example, you could save $200 to $300 per month in Thailand and $1,000 per month in South Korea.
  • The Middle East is where you could find some of the highest teaching salaries, ranging from $1,500 to $4,000 per month, with benefits that include free housing, paid vacation, and health insurance. However, the job market likely will be smaller and more competitive.

The types of teaching positions vary from program to program. Some English-speaking teachers who have teaching experience and/or expertise in another subject may land a job teaching native-English speakers at an international school. In most cases, however, you will be teaching English as a foreign language at a local school.

Qualifications and startup costs

Even though there is a need for English-speaking teachers all over the world, it’s not enough to just show up in another country with a perfect command of your native tongue and expect to find a job. You must take a TEFL (Teaching English as a Foreign Language) or TESOL (Teaching English to Speakers of Other Languages) certification course, which can cost more than $2,000, depending on which organization you choose for certification.

When choosing a course provider, consider the accreditation and training hours it offers. Most schools hiring English teachers seek candidates with accredited certifications and at least 100 to 120 hours of training. The best courses offer lots of support by helping you gain practice-teaching experience, assisting with school placement abroad, and providing other guidance.

In addition, unless you can commit to a teaching position in a very wealthy country, such as Saudi Arabia or the United Arab Emirates, you will have to cover the cost of your flight to your new home yourself. You will also need at least a month’s worth of spending money to last you until you receive your first paycheck, so careful planning and budgeting are in order.

Cost of living while teaching English abroad

The good news is that many of the countries where you can teach English abroad have a much lower cost of living than the United States.

In some places, for example, either public transportation or a bicycle will be all that you need to get around, saving you a car payment, car insurance, gas and maintenance expenses. Rent and food will also cost far less in many English-teaching destinations, meaning your monthly paychecks will go much farther, allowing you to pay down your student loan debt. Some of these countries will also allow you to join the national health insurance program, further saving you money.

Let’s look at how income and expenses stack up in three countries that are popular for English teachers:

  • China: According to teaching website Career China, an English teacher earns an average of $1,500 to $2,200 per month, but might only need to pay less than $300 in monthly rent if staying in a one-bedroom apartment on the outskirts of a typical Chinese city. You can live a nice lifestyle and still save about $1,000 each month, it says.
  • Costa Rica: English teachers in Costa Rica can expect to make a more modest $300 to $1,000 per month, according to teach-abroad website Go Overseas. Since an apartment in a large city like San Jose will cost around $300, most people share lodging with others, it says. With expenses eating up much of your salary, it’s likely you won’t end up saving much when teaching English here.
  • United Arab Emirates: Salaries for English teachers in UAE clock in at a generous $2,400 to $5,500 per month, Go Overseas says. You’ll find wide variations in cost of living, but a studio apartment in a modern area starts at around $1,000 a month. So while costs are relatively high, salaries are too, meaning you can save a moderate amount of money if you live frugally in UAE while teaching English.

How to pay $0 on your loans: Foreign Earned Income Exclusion

Another great benefit of teaching English abroad is the fact that you pay no U.S. taxes on anything you earn under $105,900 as of 2019. In order to qualify for the Foreign Earned Income Exclusion, you must live outside the U.S. for 330 days over 12 consecutive months.

You will still owe local taxes on your wages, so the money you earn is not completely tax-free. However, you are likely to have a much lower tax burden by teaching abroad, allowing you to set aside even more money for your student loan payments.

If you’re living and earning your income abroad, you might even be able to lower your student loan payments to zero by opting for an income-driven repayment plan. There are several plans that tie the amount of your monthly repayment to your income, while also setting a timeline for repayment at 20 to 25 years, after which any remaining balance is forgiven.

These repayment plans usually use your adjusted gross income to estimate how much you owe per month. If you’ve been earning abroad, the adjusted gross income listed on your U.S. tax returns may be $0, which means the amount you’ll be asked to pay every month could also be $0, at least while you’re still living and working abroad.

That said, be aware that laws do change, and that even under the current system, you’ll want to check with your servicer about your potential payments to avoid any surprises.

Is teaching English abroad to pay off student debt right for you?

For some graduates, teaching English abroad is both an exciting adventure and a savvy financial move. But living abroad while paying off student loans is not for everyone.

Most teachers in that position must still carefully budget their money to make sure they can cover their debts. And budgeting while abroad can feel constricting if friends and other expats are living and spending in vacation mode.

It’s important to remember that it can be psychologically challenging to immerse yourself in a completely different culture — and the cost of changing your mind is high. If you’re not sure, talk to people who’ve taught overseas to get a sense of whether it’s the right fit for you.

If you dream of traveling but are not sure about the demands of living abroad long-term, it might be smarter to pay off your student loans at home and plan for travel once you’re debt-free. But if you feel up to the challenge, then know that paying off your student loans while teaching abroad can be a viable option.

The information in this article is accurate as of the date of publishing. 

Katie Gustafson contributed to this report. 

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2.39% – 6.01%Undergrad
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1 Important Disclosures for Earnest.

Earnest Disclosures

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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, 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 7/31/2020. 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 [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 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

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% 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 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% 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. See eligibility details. 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. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.16% effective August 10, 2020.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. 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 to help you understand what you are buying. Be sure to consult with 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.