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Federal loan IBR repayments and payoff when working/living overseas

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  • Federal loan IBR repayments and payoff when working/living overseas

    (If anyone has read my previous postings and recognizes the username, let me mention that despite recent posts to the contrary, I have not yet refinanced a very large federal loan balance, primarily because I qualify for PSLF and want to at least see what will happen come October.)

    However, since the baby is teething and woke us up a few times tonight, I found myself sitting in front of this chromebook and idly wondered what would happen if (1) PSLF fell through, leaving us with an enormous growing balance, and (2) we nonetheless followed through on something we've always talked about, which is to move to another country.

    The information I found seems to suggest that this is a viable option, notwithstanding the 'tax bomb' at the end of a 25 year term (perhaps mitigated by a showing of insolvency?). IBR is calculated using AGI; AGI drops drastically since the first 100k you make is nontaxable (foreign income exclusion). Additionally, since in many other countries one might live comfortably on far less than in the US (experiential knowledge), potentially none of your income would be taxable, leaving you with a monthly payment of 0.

    Before someone starts lecturing about the missed opportunity costs of making mucho dinero en america or somesuch let me just say that (1) this is merely a scenario I am playing out based strictly on the two conditions I listed above. Additionally, unlike most folks on this forum I value time now relatively more than I value income later (or put in a slightly more explanatory way, I think our living costs will remain significantly lower than those of most people, although in principal I affirm the necessity of a nest egg). Finally, just to illustrate priorities, were my loans forgiven via PSLF, it is quite likely I would switch to part-time or negotiate a contract involving far less pay for far more time off.

    Anyway much of this is big talk, the above scenario is far more attractive for people who make less than physicians, but I had just pessimistically assumed that there would be some major financial barriers to moving abroad with student loans, and it seems now that this is not the case. Am I wrong?

  • #2
    Your student debt would cause you to flee the country? It's that insurmountable? I remember it being bad, but my goodness...c'mon now


    • #3
      Like I said it's more of an unexamined assumption I had that it would be difficult financially to leave the country if I were still paying off loans. Not that I would leave the country because we were still paying the loan.