Each year thousands of students apply for loan programs in order to finance their higher education. Many students find themselves unable to pay their monthly payments after they leave school.
Whether they graduated with a degree or not, sometimes the monthly payments become too big of a burden to handle. Some students have feel that their only option to escape the looming debt is to travel overseas and look for job opportunities outside of the United States.
Foreign legal systems and customs make things extremely tough for creditors, when chasing their debtors. A CNN report has indicated that 2% to 4% of student loan debt is held by borrowers who have fled outside the US to escape the repayments.
Yet, relocating to another country doesn’t guarantee a debt free future. Here we have examined what exactly happens to student loan debt when a student moves outside the U.S.
Federal Student Loans
In the US, the vast majority of students are enrolled in federal government loan programs. A key reason these loans are most sought after is the extremely low interest rates in comparison to the private market.
Additionally, the government offers students some grace period, if they are having difficulty repaying their debt. Along with numerous benefits, federal student loans have some draw backs too.
Unlike private student loan debt, federal debt does not have an expiry and it cannot be discharged easily. Above all, the government has more options to collect the debt that are simply not available to a large number of private creditors.
Interest On Loan
The interest on many of these student loans, while extremely low compared to traditional loans, can still be extremely burdensome. Many student struggle to make their monthly payments and feel that if they have to choose between paying their car payment or their student loan payment, they are less repercussions to forgo the loan payment.
Although the interest is low, it is still accumulating. If the student is making the minimum payments, as many choose to do, they will be paying on their student loans many, many years after they have moved on from the school.
This interest is legal and will follow the students to the country they have relocated to. It is important for the student to understand that being in Collections is not shameful. Cedar Financial prides itself on the ability to build trust with the student and developing a relationship with the student as the extension of the University.
International Debt Collectors
Undoubtedly, relocation of a student makes it extremely tough for creditors to recover their lost monies, since they have to bear more expenses to track the borrower.
Whilst, unfamiliar legal system and customs makes the process of collection from an overseas student even more complicated. Consequently, many creditors have been forced to take substantial loss when they are not able to locate the student.
There are few collections agencies that can provide a global reach. Cedar Financial is one of the finest international debt collection agency which has developed, for more than 25 years, a system of agencies across the world that can assist in reaching any student, no matter their location or circumstance.
Aligning ourselves with some of the top agencies in the world, have given our clients the ability to reach their students and reopen the discussion about resolving their government debt.
Coming Back To United States
Student loans cannot be discharged to bankruptcy. Early intervention is key to when discussing repayment options. The more time that passes, the harder it is to convince the student that this debt can be resolved in an amicable matter and that time will not save them.
Many students that relocate internationally do have plans to return to the U.S. at some point and therefore need to be conscious of their credit score when they return.
Cedar Financial is one of the best student loan collection agencies provides Universities the ability to reach students without the task of tracing them across the globe. We have a trusted network of agencies that are able to provide the most knowledgeable solutions in any given country.
We at Cedar act as an extension of the University, and our affiliated agencies understand the integrity required to be successful in the collection of student loans.
Student loans, generally, have very low repayment plans available. Furthermore, if any student experiences hardship, they are able to apply for a deferment or reduced repayment plan.
The biggest mistake that students make is simply to not pay. The sooner the student is able to make their payment a priority, the sooner they will be able to understand the value in preserving their credit, wherever they may be in the world.