Dreaming of a life abroad, yet saddled with student loans? Don’t fret, my friend! This warmhearted guide is here to help you navigate through the intriguing labyrinth of student loans, while you sip your cappuccino in Italy or take a siesta in Spain. Here’s your cheat sheet:
– Hang onto your Stars and Stripes bank account
– Use Automation to Your Advantage
– Stay in Touch with Your Loan Provider
– Freshen Up Your Repayment Strategy
– Don’t Play Hide n’ Seek with Payments
With this wisdom at hand, juggling student loans from lands afar will seem less of a mysterious journey and more of a joyous adventure. Let’s dive in, shall we?
Maintain a US Based Banking Presence
You may have traded your homely comfort for enchanting foreign lands, but maintaining a U.S. bank account may turn out to be your best lifeline when it comes to managing student loans. You see, most federal student loan servicers mandate that payments ought to originate from US-based funds. So, holding onto that stateside bank account is a smart plan, even if you don’t plan on returning anytime soon.
Just like a dutiful garden, your account needs to be nurtured with enough funds to bear the fruits of your loan payments and other necessary transactions. Regular wire transfers or online money transfer services can do the trick. But beware, dear friend! Sending and receiving international wire transfers often come with an extra cherry on top – fees.
Thankfully, there’s a rainbow after every rain, or in this case, a workaround for every expense! Banks with a global presence such as Chase or Citi could be your knight in shining armor, saving you from these annoying fees, depending on your new home.
Ride the Automatic Payment Train
Life abroad can be a roller coaster ride, and remembering to manually pay loans each month could add to the ride’s twists and turns. Why not take the smooth rail route instead? Setting up automatic payments from your U.S. bank account could be your ticket to consistent, on-time payments. Plus, it comes with the scenic view of possible interest rate discounts offered by many student loan servicers and private lenders.
There’s a tiny cautionary note, though. Ensure a safety net of buffer funds in your checking account to cushion you from the bumpy ride of returned payments due to insufficient funds.
Give your Servicer a Shout-out!
No one likes being kept in the dark, especially not your student loan provider! They may need to reach out to you occasionally with updates about your account. Updating your contact details such as address and phone number is a good practice, so you never miss out on important tete-a-tetes with your servicer.
If the allure of all things paperless captures your attention, you’re covered for that too! Request all communications to be online and simply ensure your current email address is updated. That way, all notifications will follow you wherever you go, just like good memories.
Update Your Repayment Regiment
Do you plan on having your cake and eating it too, i.e., enjoying a long stay abroad while efficiently managing your loans? Then a peek at income-driven repayment (IDR) plans could be enlightening. With the blessings of the foreign-earned income exclusion, you might make the most of these IDR plans! Woah, that’s a mouthful, isn’t it? Let’s break it down.
Simply put, the foreign-earned income exclusion acts like a shield, protecting your foreign earnings from being counted in your gross income when filing a U.S. tax return. The IDR plan then peers at your adjusted gross income, which won’t include these safe-guarded foreign earnings. Depending on any other income you have left, you could find yourself with monthly payments as low as $0! Talk about a sweet deal!
But don’t forget to keep an eye on the hours ticking by. Interest will continue to build up, even if your payment isn’t quite up-to-snuff to cover it. Some IDR plans add your unpaid interest to your balance, which could result in a sickening swell if you no longer have the protection of the foreign earned income exclusion upon your return to the U.S. To avoid this Titanic-like situation, consider opting for the SAVE plan, which doesn’t capitalize unpaid interest.
Avoid the Disappearing Act
When faced with student loan debt, you may be tempted to play hide and seek. But let me tell you this, playing Ostrich with your loans won’t make them disappear. Your student loans will always find you, in the US or Timbuktu. Missed payments could trouble your serene life abroad. With the scent of defaulted loans, the government can auto-deduct from your wages, withhold tax refunds, and other government benefits. It’s a pan of trouble you’d rather not stir.
If a return to the U.S. twinkles in your future, keep in mind that consistent payments keep your credit in shape, making your transition back home as smooth as silk.
The Final Wisdom
Whether you’re dancing the Tango in Argentina, savoring sushi in Japan or simply enjoying expat life anywhere in the world, managing your student loans wisely should be as much a part of your journey as your travels. And while you’re trekking through this journey, don’t forget to keep an eye on your credit health which could pave your way to other financial opportunities. Cheers to a life well-traveled and student loans well-handled!
