Millions of graduates do it; pack their bags after studying and emigrate, leaving behind a huge amount of unpaid student loan. But while it sounds pretty cushty to grab your passport and hop on a plane to escape your worries (crippling amounts of debt), is it really a solution?
To put it bluntly, no.
In the US, graduates owe way over US$1 trillion in unpaid student loans, a figure that allegedly increases by US$2,000 every second. And it’s the same in the UK, Denmark, and most other European countries. In fact, debt skipping is going on all over the world.
The myth goes that if you move abroad for a certain period of time, your debt is wiped but, alas, this is just not true.
But surely you can just hide, right? How will they track you down on a tiny island in the Pacific, or among a million other people in a city halfway across the world?
While it’s true you may be able to slip through the net, it’s unlikely you will go without any consequences.
Do I have to pay? Can they make me?
Yes and no. Legally you are obliged to tell student loans if you’ve found employment, where your place of work is, how much you earn and all the other gory details of how you intend to pay your debts. You are obliged to pay.
Much like the majority of countries, if you studied in the UK, even if you now work for a foreign company, you are required to pay your loan back from abroad.
“The student loan has been set up as a contract, not a tax,” Money Saving Expert Martin Lewis told The Tab. “Therefore, the fact that you’re no longer living in the UK doesn’t affect that contract,” he continued.
But, here’s the catch, there is very little they can do to make you pay. It is certainly not in your best interest (pun intended) to avoid paying your loan but there is little the loan company can actually do – especially if you do not live in the country.
But they will harass your parents, your old employers and anyone else they can link you to
And they won’t give up. Expect regular phonecalls – one debt-skipping-graduate told Vice that student loans called every hour when she went home – to you and your family members.
Some students may have had their parents co-sign on their loan, which means if they don’t pay, it’s down to their parents to foot the bill.
What’s worse than landing yourself in financial difficulty? Burdening your family members too.
“Once I moved abroad […] I just stopped paying,” anonymous graduate ‘Zoe’ told Vice.
“Once you move abroad, you just kind of turn off that whole part of your life off. They can’t touch you; you’re elusive.”
“But they started calling my parents, my grandparents, my past employers. And I was just living my life in Europe, kind of oblivious to it.”
Your debt won’t go away even if you run from it
Your debt will only be gaining more and more interest as you hide, so the startling amount you left behind will now be significantly higher, amplifying your fear and inability to pay it.
You can run but you can’t hide (okay, you can totally hide, but not forever). And when you do want to return, there is going to be a monster of a debt waiting for you.
You can wave goodbye to a good credit score
Chances are no matter where you are from – or where you studied – having huge amounts of unpaid debt isn’t going to do wonders for your credit rating. This can make things like applying for a credit card or future loan or buying a house near impossible.
It is only likely to ‘work’ if you never (ever ever) plan on returning to the country
When you are young it may seem like an easy choice to up and leave the country, but you have no idea what you will want in a years’ time, or two, or six, or twenty. At some point, you may want to visit your family, or even move back home… and the debt collector will be there, waiting for you.
The Student Loan Lawyer’s Joshua Cohen told Vice if the graduate never intends to return to – or even affiliate with – the country in which they owe money to, then it just might work.
In the US, Cohen said graduates who debt dodge by moving abroad “will only feel consequences if they’re working for a US company on foreign soil.”
If I ever went missing in the woods, I probably don’t ever want to be found because I’m probably hiding from my student loans.
— denali (@degandhi_) November 12, 2017
If you do not pay taxes in the country you studied in and are living abroad working for a foreign company, there is very little loan companies or the government can do. But running does not make it disappear.
“I’m worried about the consequences,” an anonymous graduate who moved from the US to Berlin, partly to skip his debt told Vice. “I’ve blocked the loan company’s emails from my inbox.”
“I’m sure they will go after my parents soon, but that won’t do much because they don’t have any money either.”
As the student loans system crumbles around them, thousands of graduates take advantage… But how long until it all falls apart, for the debt skippers and the loans companies?