CNBC profiles a small handful of young Americans who have moved abroad and ceased payments on their student debt, relying on international borders to protect them from their edu-creditors.
It’s not clear how many young Americans have gone this route. That said, the story is fascinating, since — as an expert in the story says — this is effectively permanent exile. Once you stop paying your student loan, your lenders get to add penalties and compound interest on the penalties, then add more penalties and compound even more interest. Walk away from those debts and they will balloon to the point where you can never pay them back — and since student debt is the only debt you can’t effectively escape through bankruptcy (it’s also the only debt that can be taken out of your Social Security), turning your back on student debt means never reestablishing residence or holding assets in the US or any country that could be reached through a treaty arrangement.
The exiles had struggled with low credit scores in the USA before leaving — scores that were tanked by their nonpayment of student loans, which made everything else (housing, employment, access to credit) even harder, making it impossible for them to repay their loans.
One of those profiled is living for $50/month in rural India, where he gets to see elephants all the time — but where he was also hospitalized by eating bad goat meat. The others are teaching English in China, Japan, Ukraine, and other places where the wages are low, but the expenses are also low.
Elizabeth Warren has proposed canceling student debt as part of her 2020 campaign. I am a donor to her campaign.
Seeing no future for himself in the United States, he decided to move to China in 2011. In the city of Zhongshan, he discovered he loved teaching students English. Unlike when he was delivering greasy boxes of pizza, he found his work meaningful and fulfilling.
Though he earned just around $1,000 a month in China, the school where he was teaching covered most of his rent and the cost of living was much lower than in Pennsylvania.
A few years later, Albright moved to Ukraine, where he is now a permanent resident. He first taught in Kiev and now does so in Odessa, a port city on the Black Sea. He has no plans to return to the United States. “I am much happier in Ukraine,” he said, adding that he hasn’t checked his student loan account in nearly eight years.
These Americans fled the country to escape their giant student debt [Annie Nova/CNBC]