Guide to Paying Student Loans While Living Abroad

Q: Can you refinance student loans while overseas?

You may be able to refinance student loans while overseas if you can meet a lender’s underwriting requirements for credit and income, or apply with a cosigner who can. However, some refinancing lenders require that you have an address in the U.S. If you can’t provide a U.S. address, such as your parents’ address, it could still be worth speaking with a refinancing lender to see if there’s a workaround to this requirement.

Q: What happens to my student loans if I move out of the country?

Your student loans don’t disappear when you move out of the country. You’re still expected to fulfill your repayment obligations. However, you may need to update your contact information with your loan servicers or set up a new repayment arrangement so you don’t miss payments.

Q: Do I still need to pay my student loans once I move out of the country?

You’re still obligated to pay your student loans even if you move out of the country. Missing payments could cause your student loans to go into default, which could damage your credit, lead to wage garnishment, or have other negative consequences. By setting up autopay from your U.S. bank account — and making sure you have enough cash in the account to pay your bills — you can avoid missing payments on your student loans.

Rebecca SafierUpdated August 25, 2022

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Living abroad can be the adventure of a lifetime, but you may still have financial responsibilities to deal with back at home. If you owe student loans from college or graduate school, you’ll need to continue paying them to avoid default. Fortunately, you may be able to lower your student loan payments through strategies such as income-driven repayment or refinancing. Paying off student loans abroad doesn’t have to be complicated, but you will have to take some steps to ensure everything goes smoothly.

What Happens to Your Student Loans When You Move Abroad?

Your student loan debt doesn’t disappear when you move abroad. You’ll still owe the same amount on the same repayment schedule. For most student loans, that means paying back student loans every month to your assigned loan servicer. As long as you keep making the required payments, your student loans will remain in good standing. You can enjoy living in a new country while slowly but surely chipping away at your student loan balance at home.

What Happens If You Don't Pay Your Student Loans and Leave the Country?

When you move abroad, it might be tempting to ignore your student loan debt. But missing payments could cause your student loans to go into delinquency or even default. There are a number of negative consequences that come with student loan default. For one thing, your credit will be seriously damaged, which could make it hard to open a credit card, get a mortgage, or even rent an apartment in the U.S. in the future. Debt collectors could also start contacting you for repayment. Although they may not be able to call you if you’re out of the country, they could call any cosigner that you have on your student loans. When you default on federal student loans, the government can also garnish your wages, tax refund, and even Social Security benefits. While this consequence may not impact you much while you’re overseas, it could lead to financial instability later in life if and when you choose to return to the U.S. You may have the option of negotiating student loan payoff if you’re in that position.

Ensuring You Can Pay Your Student Loans Abroad

To avoid the headache of student loan default, here are some steps that will help you manage your student loans while living abroad.

1. Update Your Information

First, make sure to update your contact information with your student loan servicers. You can easily update your personal details by signing into your online accounts. You may be able to provide an international mailing address. Alternatively, you might consider providing your parents’ or a trusted friend’s address if you want to keep your mail in the U.S. By updating your contact information, you can ensure you don’t miss any important communication from your loan servicer.

2. Set Up Autopay

Setting up autopay on your student loans will also help you stay on top of payments. When you select autopay, a loan servicer automatically withdraws your student loan payment on its due date every month. Along with helping you make on-time payments, autopay often scores you an automatic 0.25% reduction in your interest rate.

3. Connect Your Bank to Your Account

If you’re making money abroad, you may be using an international bank account. In this case, you’ll probably need to set up automatic transfers into your U.S. bank account so you have enough in your home account to cover your student loan payments. You may need to communicate with your home-country bank to make sure it accepts transfers from foreign banks or see if it charges any international transaction fees. It’s also a good idea to keep a cushion of savings in your U.S. account to cover a few months of student loan payments while you get everything up and running.

4. Apply for Income-Driven Repayment

While you can’t ditch your student loan debt when you move abroad, you may be able to lower your monthly payments. If you have federal student loans, you could apply for an income-driven repayment plan, such as Income-Based Repayment or Pay As You Earn. Income-driven repayment plans adjust your monthly payment along with your income. You might pay 10%, 15%, or 20% of your discretionary income. At the same time, your repayment terms will be extended to 20 or 25 years. If you still have a balance at the end, it could be forgiven. If you’re earning money in another country, furthermore, you might see your student loan bill on an income-driven plan go down to $0. Thanks to the Foreign Earned Income Exclusion, you can exclude up to $112,000 in foreign-earned income when you report your taxes as long as you lived abroad for a full tax year and meet other requirements. Since your payment on an income-driven plan is based on your income, it could end up being $0 if you have no U.S.-based income to report for that year. Effectively, you’d be able to pay nothing on your student loans without going into default. Of course, your student loan balance won’t be going down, and it could even end up growing due to interest charges. But if you can’t afford your federal student loan payments while living and working abroad, this approach could offer the breathing room you need.

Refinancing Student Loans While Living Abroad

Another option for managing your student loan debt is refinancing your student loans while abroad. Here’s how refinancing works: Essentially, you trade in one or more of your existing student loans for a new one. Depending on your credit, you could qualify for a better interest rate and more appealing terms than you have currently. As long as you can meet a lender’s requirements for credit and income (or can apply with a cosigner who does), you should be able to qualify for refinancing. However, some refinancing providers require that you have a mailing address in the U.S. If you can fill in your parents’ address, this requirement might not be a roadblock. If not, however, you may need to speak with the refinancing lender about a workaround. Some lenders may be flexible about this requirement as long as you meet their other lending criteria.

Benefits of Refinancing Student Loans While Living Abroad

Refinancing student loans has a number of potential benefits, including getting a lower interest rate. Lowering your interest rate by even a small amount can lead to major savings over the life of your loan. It can also reduce your student loan bills since you won't have to pay as much interest from month to month. Plus, you’ll get to choose new repayment terms, often between five and 20 years. You could opt for a shorter term to pay off your loans sooner or a longer term to reduce your monthly payments further. Finally, refinancing multiple loans lets you consolidate them into one. Instead of having to track several loans from different loan servicers, you can simplify repayment by paying back just one loan. Along with these benefits, however, there’s an important downside to consider: Refinancing federal loans turns them private and makes them ineligible for federal protections. If you want to retain access to income-driven repayment plans, for instance, it wouldn't make sense to refinance federal loans. Make sure you understand both the pros and cons of refinancing before you apply.

Student Loan Refinancing With Lantern

Refinancing your student loans has the potential to simplify repayment and reduce interest charges. If you’re interested in refinancing, many lenders let you check your rates online with no impact on your credit score. By taking advantage of this prequalification, you can quickly browse offers with no obligation. Lantern by SoFi can help you find and compare student loan refinance rates so you can find the best offer for you.

Frequently Asked Questions

Can you refinance student loans while overseas?

What happens to my student loans if I move out of the country?

Do I still need to pay my student loans once I move out of the country?

Photo credit: iStock/martin-dm

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About the Author

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).

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