If you have student loans... can you still teach abroad?
Yes! Great, we’re done here... just kidding.
Unfortunately, it’s not quite that simple. While the answer is yes, you absolutely can teach abroad with student debt, it’s not as easy as just sending Sallie Mae a quick email letting her know you’ll be teaching English in Cambodia for the next two years and hopping on a plane.
Student loans are one of the great scourges of our era, hanging over our generation’s collective heads like a horrible economic thundercloud, but unfortunately ignoring them doesn’t make them go away, no matter how many miles you try to put between yourself and them.
So no, you can’t get rid of them immediately, but that doesn’t mean you have to give up on your dream of teaching abroad -- you just need to be a little more intentional and strategic about how you go about doing it. Here’s how you can navigate teaching abroad with student loans.
What Can I Do with my Student Loans?
Like I mentioned earlier, it's not quite as simple as "yes, you can teach abroad even though you have student loans." You have to have a plan of action and know how you're going to deal with them while abroad -- just as you would while at home. In this section, I'll be discussing the following options:
- Paying off your student loans with your teacher salary
- Deferring your loans for the duration of your time abroad
- Getting forgiveness on your student debt
Most recent grads will opt for one of the first two options, but I wanted to get into number three nonetheless. Lets get to it!
Paying off your student loans
Plenty of people have found ways to pay off their student loans while teaching abroad. It’s not a possibility for everyone, and will depend on your individual loans and financial situation as well as the salary you make as a teacher, but it’s not out of the question.
With all that said, paying off your loans while abroad requires planning, sacrifice, and a little bit of luck. This is also much more feasible in some countries than others – South Korea, for example, has historically been a favorite for English teachers hoping to save up some debt relief funds during their time teaching, as are some other Southeast Asian and Persian Gulf countries.
If you have free or very affordable housing and a decent salary and live in a country with a relatively low cost of living, it’s entirely possible that you’d be able to put away several hundred dollars a month to pay off your loans – and that can add up fast. Once you have an idea of how much you’ll be able to put toward your debt each month, you can come up with a payment plan (starting with the smallest loan is one option) and start hacking away at that debt mountain.
You’re not the only one with this bright idea, though, and as competition has gotten fiercer for these jobs, the hiring process has become more demanding.
A Note on Taxes
If you're from the US, the IRS is actually kind of on your side for once. US citizens living abroad for a full calendar year can qualify for an exemption from paying taxes on the first $100,800 they earn annually (and honestly, if you’re worried about paying taxes on your second $100,800, you probably don’t even need to stress about paying off your student debt).
If you’re working abroad, you’re likely getting taxes taken out of your local salary, but the good news is that you’re not getting taxed twice, so if you’re making a decent local salary that’s under $100,000, you should have enough coming in to pay off some of those loans.
Deferring your loans
Convincing a lender to let you defer your loan is going to be a lot easier if you’re teaching through a volunteer organization (like Peace Corps) than if you get a contract teaching job abroad.
If you're volunteering, you’re technically making no money, which means you may qualify for deferment or even forbearance on federal loans. If you qualify for deferment on a subsidized loan, for example, you can pause payments for up to three years with no additional interest. If you have unsubsidized loans, you’re going to have to pay the interest, but not until the end of the deferment period.
If you don’t qualify for deferment, you still might be eligible for forbearance. If you put your loans in forbearance, you’ll still be accruing interest, but you’ll be able to stop payments or at least lower your monthly payments for up to 12 months – definitely enough time to get your finances in order and start planning how you’re going to start paying those loans off!
If you only have loans from private lenders, don’t panic – some private lenders offer similar deferment or forbearance options for hardship or for volunteering full-time with a charity or NGO. You might never know if you don’t ask! Again, you likely won’t qualify for any of this if you have a paying teaching job, but it can be a life-saver if you’re starting out as a volunteer.
Before you get too excited, forgiveness is a very long-term concept here – most forgiveness doesn’t happen overnight, and loan forgiveness is no exception. We’re talking 15-20 years down the road, so it’s not going to solve all of your financial concerns immediately. However, it’s important to know that it is an option, especially if you’re planning on going into the public sector or working as a (likely underpaid) NGO employee in the future.
The Obama administration has introduced a number of different plans that link loan payments to a borrower’s income and offer a chance for loan forgiveness for low-income earners. The most well-known of these programs is probably the Public Service Loan Forgiveness Program, which offers loan forgiveness to people who spend at least 10 years working in the public sector.
This doesn’t do you much good if you’re going abroad to teach, but depending on your salary, you may qualify for one of the other reduced repayment plans that offer an option of eventual forgiveness. Even if you don’t make it the 20 years you need to get your loans forgiven, the reduced payment plans can make life a lot easier while you’re abroad.
If you have a demonstrated Partial Financial Hardship (or even if you don’t, under new regulations that took effect at the end of 2015), your monthly payments on certain federal loans will be capped at a maximum of 10 percent of your discretionary income, which isn't bad.
Not everyone qualifies for this option, of course, but if you’re not making a lot of money – at least as far as the exchange rate goes – it’s worth looking into if you can reduce your payments at least for the duration of your time abroad.
But Does it Actually Work?
In reality, many people end up using multiple plans or some combination of these options, depending on the different kinds of loans they have and their actual ability to pay off some of the debt, either with savings or income earned abroad.
“I did both – I deferred and had savings I used to pay some loans off while I was volunteering,” explains one former volunteer teacher. “I was six months out of undergrad and stupid and in hindsight, I wish I hadn’t deferred any and just paid them normally. I had enough savings to do it, but got distracted by travel dreams and the desire to keep a good amount in the bank.”
Another former teacher described her loan-payment strategy this way: “I dropped the monthly payment to the minimum and stuck my head under a pillow [and tried not to think about it].”
Even if neither of these strategies sounds ideal to you (although sometimes the pillow really helps), it just goes to show that the solution is going to be different for everyone. There’s no one formula to taking your loans abroad with you, despite what those eye-catching headlines want you to think, but the fact that everyone quoted here survived their time teaching abroad and have not to date been crushed under a pile of compounding interest is a testament to the fact that it can be done.
What's the Best Option for Me?
Your options are also going to depend on the types of loans you have – often (though not always) federal loans are more flexible than private ones, and their customer service is often a lot more human-friendly.
No matter your provider, getting a loan deferred or lowering the monthly payment is going to require filling out a lot of forms and very likely more time than you'd like to spend listening to hypnotizing hold music.
Though many lenders do offer different options for loan payments, that information isn’t always readily available or easy to find on the loan provider’s website. You’re often going to be better off just calling the provider. If you talk to a real human, you have a better chance of being able to state your case for why you should qualify for deferment or lower rates, rather than just filling out a form and hoping the robot running an algorithm on all your numbers feels kind that day.
Yes, you do always run the chance that you’ll end up with the one customer service rep who doesn’t know anything about what you’re trying to do – but if that happens, all you have to do is hang up and call back to talk to someone else (after the musical interlude, of course).
Make a payment plan
Before you even start working on sweet-talking the people that have the power to ruin your future, you need to have an outline of what you expect your finances to look like for the time that you’ll be abroad. Whether you’re taking a teaching job abroad with the goal of paying off your loans or deferring while you teach and resuming payments when you get back, you need to have a really solid idea of how teaching abroad will affect your finances – the pros and the cons.
Even though you’re not an accountant, you can still get a ballpark idea of how much you expect to make and spend over the next year or however long you anticipate being abroad. Sit down and plot out your expected loan payments (if you’re making them) for that time period, as well as an estimate of your living expenses. This will give you a rough idea of how much income you’ll need in order to keep your head above water, so you can start looking for jobs that will allow you to do just that.
Go Overseas has several salary and cost of living guides for teaching in some of the more popular destinations that can help you outline this information.
Consider teaching in a better paying country
For the idealistic types out there, prioritizing higher-paying jobs might seem like a cynical way to approach the whole endeavor, but it’s just being practical.
You may have your heart set on volunteering in a rural, under-resourced school in the middle of Tanzania, but if you don’t qualify for deferment or it’s not an option with the loan providers you have, how are you going to come up with the funds for those monthly payments if your income is zero? Adding to your debt might not be the best choice for your future (or current sanity).
Be flexible in the teaching destination you choose and consider opting for an area with higher teacher salaries.
So How Long Can I Stay Abroad?
There’s no one answer to this question – it's going to depend on whether you’ve deferred your loans and for how long, how much you’re able to pay each month, how much you’re earning (or not) and other individual factors unique to you and your finances.
If you’re going the deferment route, it's important to know that many lenders only offer it as an option for up to three years, so if you’re planning on staying longer, you’re going to have to come up with an alternate plan. If you’re making good progress on paying off your loans with your current income, you may be able to stay abroad for as long as you want (or at least as long as they keep giving you a visa)
Loans Suck, But Don't Let Them Keep You Stuck at Home
The unfortunate reality of life as an adult is that it's not always easy, or fun, especially when it comes to managing your finances and the sometimes overwhelming task of paying off thousands of dollars of debt. The fortunate reality of life as an adult is that you are in charge of your financial and other important life decisions.
So now that you know it's possible to teach abroad, even if you have student debt, you don't have to let anyone talk you out of doing it. As long as you have all the information you need, a solid plan for how you're going to manage your payments while you're abroad and some kind of a budget to help you stay on track, there's no reason to let your passport start gathering dust.