Does Moving Abroad Mean I Escape My Student Loan?
There are a lot of opportunities that moving abroad presents to you but travelling abroad to evade paying back your student loan is not a good idea. A lot of students think this is a better option to paying off their student loan debt which they may still be paying even in their fifties if there are no better opportunities.
While some students hop on a plane the minute they graduate from college, they really don’t escape paying their student loans and here are the reasons.
Poor credit scores
Your lender might report you if you become a defaulter in the payment of your student loan and this would drastically affect your ratings. Your payment history makes up a third of your credit grades and with low credit scores applying for a mortgage, getting new credit cards or even asking for a new loan becomes difficult.
You are at risk of legal actions once it is discovered that you have become a defaulter in your loan payments without notice of deferment. Defaulting in repayment translates into failure to comply with the terms of your loan contract and your lender can file a lawsuit against you for the breach of contract, claiming full payments with damages as well. Risking a lawsuit against you would have adverse effects on your credit ratings as well. It definitely would cost you more than you owed.
Your debts won’t be cancelled or forgiven as you thought they would when you flee abroad. It would be transferred to your co-signers if your contract made room for any. If your co-signers turn out to be your family members, they would be made to pay every penny still been owed by you. Transferring your debts to others shows both lack of love for them and a lack of financial discipline.
You only succeed in increasing the amount of money you have to pay back running away from your student loan. While you are away, the interest on your student loan piles up, and if you ever return, the amount of money you’ll have to pay would have gone beyond what you expect.
If you are going to move abroad after graduating there are measures you should put in place to prevent you from defaulting. They include;
Communicating with your loan officer
It is essential to let your loan officer know where you are going to, you would be leaving and if you’re ever coming back. You are required to provide updated contact information, too, as a lapse in communication affects your student loan status.
Be updated on your loans
To avoid missing payments, you can either set up automatic payments or consolidate your loans. Before setting up automatic payments, the foreign account you set up is linked to your local accounts to make withdrawing your student loan easy. That way, it is easier for deductions to be made for your loans while you are away and keep you on track. On the other hand, consolidating loans help you manage payments when you are abroad.
So, in blunt words, no! Your moving abroad doesn’t mean that your student loan would be waived. You would have a massive pile-up of debts waiting for your return. The best thing to do is sort out ways to pay off these debts any way you can before or while you are away.
Considering studying abroad? Check out our student visa guides below:
An Expat Student Guide to Canadian Visas