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Moving abroad doesn’t erase or suspend your student loan debt. Borrowers are still legally responsible for making their monthly payments, but they also don’t lose access to repayment assistance programs and other resources. One option they can take advantage of is the foreign earned income exclusion (FEIE), which is only available for United States expats.
Key Takeaways
- The obligation to repay your student loans remains regardless of your geographic location.
- Missed student debt payments while abroad are handled differently depending on whether you have federal or private student loans.
- Borrowers enrolled in certain repayment plans can utilize the foreign earned income exclusion (FEIE) to reduce their taxable income and, in turn, their monthly student loan payments.
Understanding Student Loan Obligations Abroad
Even while living overseas, you’ll still have to keep up with your student debt payments. However, depending on whether they’re federal or private loans, the consequences of failing to make on-time payments can vary.
In the case of federal student loans, the government may try to recoup its losses by offsetting your tax refunds or Social Security benefits. Alternatively, it may garnish your wages if you’re working for a company based in the U.S.
Private lenders may have a harder time collecting on defaulted student debt if you’re living abroad. However, the statute of limitations on private loans can be paused when you leave the country, while federal loans have no statute of limitations. As such, either type of lender can take you to court if you ever return to the U.S.
Regardless of the type of loans you have, defaulting on your student loans can severely damage your credit score. As such, should you eventually move back to the U.S., you also likely have a harder time qualifying for new debt.
Managing Student Loans From Abroad
Here are a few tips for staying on top of your student loans while in another country:
- Maintain a U.S. bank account: Certain federal student loan servicers require payments to be made from a U.S. bank account. Keeping one in good standing avoids the hassle of transferring money (and converting currency) from a foreign bank account in order to make payments.
- Set up autopay: Authorizing your servicer to automatically withdraw funds from your bank account will save you the trouble of having to remember to do so manually. Additionally, you may qualify for an interest rate discount, depending on your lender.
- Update your contact info: Ensure your loan servicer has your updated contact and bank details while you’re abroad to avoid missed communications and payment issues.
If you’re on an IDR plan, you may also be able to reduce your student loan payment by taking advantage of the foreign earned income exclusion (FEIE). This policy lets you subtract income earned and taxed in another country from your U.S. taxable income—up to a certain limit that adjusts each year for inflation ($130,000 per person in 2025). And with a lower income in the eyes of the Internal Revenue Service (IRS), you may qualify for a smaller IDR payment.
Important
The future of the current IDR plans is up in the air following a federal court injunction stopping the United States Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.
While this strategy won’t work for private student loans, you may be able to refinance them to lower your monthly payments and repay your debt faster.
The Bottom Line
Ultimately, moving abroad won’t absolve you of your student loan obligations. However, by staying in close contact with your loan servicer as well as utilizing the available resources that can assist with repayment, managing your student debt while overseas can be a breeze.
