Things to Consider before Moving Abroad with Huge Student Debt
I was told by everyone, starting from my best friends and parents and finishing with all the financial advice articles I could find, that moving abroad with six figures’ worth of student loans is a bad idea. However, I would not listen to anybody. I decided to move abroad. First, I moved to Quebec, then to the United Kingdom, and now I am going to France.
And I must say that there are some financial benefits of living outside the USA. For example, healthcare is significantly cheaper in most other countries. You do not have to pay up to $200 out of your paycheck each month to stay on health care plan. Also, you have an opportunity to go to the doctor without any copay and are really able to afford medicine. Also, you are able to get pregnant and give birth, and it will cost you nothing in extra fees.
However, I also learned the hard way that managing student loans while living abroad comes with multiple challenges. It was even more complicated because I did not have a high-caliber bank account, which allowed easy international transfers.
Anyway, moving abroad even with huge student loans is possible. To cope with everything, it is important to keep the following points in mind:
Select the Location Carefully
If you have such an option, choose a country where the currency is stronger than the US dollar. In this case, even if you get the lower salary, your financial situation is still fine. I planned to do so when I moved to the United Kingdom in May 2016, as one month before, in April, 1 British pound was worth 1.47 US dollars. However, that comparative advantage was gone in June, 2016.
If you are going to move to the country where the currency is weaker than the USD, you will definitely need to get a very solid salary. Otherwise you will have no possibility to meet the monthly student loan payments. Several years ago, I received a great offer to get a job in the Philippines, and I was very excited to go – but then I learned I would be paid in Filipino pesos at an unprofitable rate. That would not work for my financial situation and, unfortunately, I had to refuse.
Get Your Accounts in Order before Leaving
Please note that resolving payment issues with student loan companies is a complicated and lingering process, where international banks are not involved. So if there are any unresolved problems, make sure to solve them while you are still in the USA and are able to run to your local bank branch when it is needed. Additionally, you will have to inform your bank that you are going to move abroad, so you will not have the hassle of trying to prove your identity from several time zones away. Figure out what address you can tie your American bank account to and make sure to do it in advance of your move.
Check whether Your Bank Provides Fee International Exchanges
I know for sure that there are just few banks in the USA, which provide this service. But all of them require the customer to maintain a very high bank balance. So, if you do not have several thousand to spare, this will not work.
It is necessary to ask beforehand what your US bank will charge to transfer your money from a foreign bank into your own account. Mention that you will be charged on both ends of the transaction: for transferring out and transferring in. You have to include these charges in the overall money transfer and your budget. If you do not do so, you will likely have additional charges.
Always watch your bank accounts very thoroughly. If a fee becomes suspicious, contact the bank and ask for an explanation. You might also like using services that help get around bank fees, such as TransferWise. Though it is a great idea, US banks somehow can block clients from using this service.
Leave enough Time between the Transfer and the Student Loan Payment
American banks are behind banks in most other countries in the aspect of money transfers’ speed. For example, it takes less than 24 hours in most European countries for a bank to accept and deposit a transfer, while the American bank will require up to five days for this transaction. You have to plan wisely to make sure that when your student loan company does its automatic withdrawal, you will for sure have enough money in your account to cover it. If this requires asking your employer to change your pay date, do not feel shy to do so. If your employer cannot accommodate such a request, you will have to plan your budget a month in advance.
There also is a probability that your employer will be willing to deposit the paycheck into your US bank account. For example, I worked in Quebec for a US-based news company, which was good enough to deposit my salary into my American bank account and this way cut out transfer fees. Such an arrangement was sufficient for me as my living expenses were covered by my Canadian partner’s paycheck. But if you are single, the following will be probably better for you: have your paycheck deposited in your American bank account, wait for the student loan payments to clear, and when it is done, withdraw the rest in one transaction to your local bank account.
Ask Your Provider about Direct Payments from your Local Bank
Make sure to ask a couple of times. I first asked one of my student loan providers whether it was possible that they accepted direct payments from my Canadian bank. They brusquely refused and claimed that they accepted only the payments from American banks. But later, I asked one more time. That time, I was transferred to a manager, who grudgingly said there actually was an option that allowed customers to pay directly from foreign banks. I had to notify the student loan company each month that the payment had been made via international transfer. However, I think that it is much better to have one extra call than to pay about £10 in outgoing transfer fees and $25 in incoming transfer fees. Make sure to use a free VoIP service to make such calls.
Pay Your Bills
There might be a temptation to think that because you are out of your homeland with a new phone number you can afford not paying your loans. It does not work. It affects very badly your credit, it wrecks your finances, and it makes you feel like you are a bad person. Besides, whoever co-signed your loan will get a million phone calls, and that is not fair to them.
Living abroad with student debt is possible. Stay proactive, do your best on your job to provide yourself with enough money, and keep plugging away at those loans. Eventually, your credit and your mental health will thank you. Also, make sure to enjoy the international adventure you are having.