How to Work Abroad While Paying Off Student Loans

Written by: Kristyn Pilgrim
Updated: 9/10/20

Are you looking for a unique way to pay back your student loans more quickly? If so, you might consider working abroad. By taking advantage of the low cost of living in foreign countries, you can dedicate more of your earnings to pay off your debt. Here, we’ll cover how to work internationally, strategies for saving money, and tips to handle the mechanics of paying back your loans while abroad. 

How to Work Outside of the United States

Working outside of the United States doesn’t have to be complicated. Some individuals choose to work for a U.S. employer while living abroad, while others find local employment. 

Working for a U.S. Company While Living Abroad 

One of the easiest ways to save money quickly is to work for a U.S. employer while living outside of the country. As of February 2020, the U.S. had roughly 5 million remote workers. Due to the COVID-19 pandemic, teleworking has continued to boom. If you’re going to be working remotely anyway, why not live abroad to save money? 

Regions like Southeast Asia and Latin America have a vibrant culture and a low cost of living. While making $30,000 annually in New York City won’t get you very far, the same salary will leave you with significant savings in many areas across the world. If you need to be available to answer video calls and emails during regular business hours, Latin America lines up nicely with many U.S. time zones. 

While working for a U.S.-based company will often help you earn much more money than if you worked locally in a foreign country, you may have a more difficult time getting a long-term visa. One option is to enroll in a local university as a student. Alternatively, some countries have freelancer and non-lucrative visas, which might be a good option if you want to work for a U.S. company. 

If you don’t want to deal with the hassle of getting long-term residency, you could decide to hop between countries on tourist visas. In addition to giving you a taste of adventure, staying on tourist visas allows for flexible travel plans. Many nations allow Americans to stay for three months without a visa and offer a three-month extension upon request. 

If you work for a U.S. employer, you’ll need to file a tax return and pay federal income tax as if you were living in the U.S. 

Working for a Foreign Organization

Another option is to dive in and find a local job in a foreign country. Working locally can make the residency process much easier if you can find an employer who is willing to sponsor you for a work visa. Many organizations, including English schools and technology companies, are especially well-suited for Americans who want to work abroad. Obtaining a foreign work visa is often much easier than foreigners trying to get work visas in the U.S. However, make sure to follow local rules and honor their requirements. 

Finding local employment is an exciting option for individuals who want to know the local culture as much as possible. Instead of working remotely with co-workers several time zones away, you can get hands-on experience in a new community. By interacting directly with your co-workers, you can learn about new and different ways of life. 

While working for a foreign employer can be a rewarding experience, you’ll often make less money than you would be working for a U.S.-based employer. For example, English teachers in Latin America make between $500 and 1,000 per month. While teaching in Asia or the Middle East earns more, you’re still unlikely to make as much as you would working for a U.S.-based employer. Of course, each opportunity is different, so be sure to evaluate all of your options before taking a new job. 

If you decide to work for a foreign employer, you might be able to take advantage of the foreign earned income exclusion. Individuals who live and work abroad can exclude foreign earnings from their taxable income in the U.S., up to just over $107,600 (in 2020). Make sure to review the IRS’s website to see whether you meet all of the requirements. While you may be exempt from paying U.S. income tax on your foreign earnings, you’ll still likely need to pay local taxes in the country where you reside. 

Saving Money While Living Abroad

When it comes to paying off your student loans, the more money you can save, the better. Living abroad is an excellent way to cut down on costs. The more you save, the more you can direct toward paying down your student debt. Here are a few ways to cut back on expenses. 

Live Like the Locals 

When you’re visiting a foreign country on vacation, you’ll find plenty of places that charge high prices. However, if you want to save as much money as possible while living abroad, you’ll want to live like a local. 

Instead of ride-sharing or taxis, learn how to take public transportation, which can save you money and offer a little adventure. Avoid touristy bars and restaurants – ask around to find local favorites off the beaten path. Better yet, shop for groceries at inexpensive markets and cook food yourself. 

Finding inexpensive housing is also essential if you want to keep costs as low as possible. Instead of browsing English-language websites for expatriates, try working with locals to find inexpensive options. If possible, try living with a roommate. Some English schools provide accommodations for their teachers, which can cut costs even more. 

Create a Budget 

To pay off your student loans as quickly as possible, try to create a realistic budget. After getting acquainted with your new home, calculate your essential expenses – plus a little extra for fun. Then, commit to using the rest of your earnings to pay off your student debt. The more you save, the faster you’ll become debt-free. 

Don’t Travel Excessively 

While living abroad, try to get to know your new town or city instead of constantly traveling. Plane tickets and hotel rooms can add up quickly, cutting into the savings you could use to pay off your student loans. Plus, exploring your local environment will help you find a supportive community. You may not get the opportunity to live abroad again, so you should make the most of the experience and get to know your neighbors. 

Choose Debit and Credit Cards Wisely 

If you’re not careful, you might rack up ATM fees and currency exchange expenses by using credit and debit cards abroad. Before you move, consider getting a travel credit card. Many travel cards waive foreign transaction fees and offer bonus points for travel and dining expenses. You may also want to open a checking account with a bank that reimburses you for ATM fees. 

How to Pay Back Student Loans While Abroad 

Now, let’s get into the nuts and bolts of paying back your student loans while abroad. Your situation will vary depending on your employer and your new home country. 

Loan Payment Options 

If you work for a U.S. company, paying your student loans is a breeze. After your employer deposits your paycheck into your U.S. bank account, you can pay your student loans directly. This strategy can also work well if your bank has international branches, allowing you to deposit local currency directly into your account. 

In many cases, working for a foreign company might make paying back your loans a little more complicated. You might need to open an international bank account in your new home country. Then, you’ll have to transfer money to your U.S. bank account before paying your loan provider. When planning your loan payments, make sure to consider fees or time delays accompanying international bank transfers. 

A third option is to pay your student loans with a U.S. credit card, which can work well if you’re in a pinch and need to pay your student loans quickly. However, some loan providers might not accept credit card payments. Or, if they do, you might have to pay significant fees. Plus, you’ll usually need to pay off your credit card with a U.S. bank account. 

Communicate With Your Loan Provider 

Before moving abroad, make sure to contact your loan provider and let them know that you’re planning to make your payments from outside the country. Specifically, you might want to do the following: 

  • Ask about fees associated with your new payment method 
  • Set up auto pay from your U.S. account 
  • Give your bank your new international contact information 
  • Clarify your payment schedule 

Communication is everything. By reaching out to your bank before you move, you can prevent misunderstandings from arising once you’re abroad. 

Get Help With Repaying Student Loans 

If you or someone you know is working to pay back their student loans, has the resources to help you pay off that debt as efficiently as possible. Our experts have a wealth of experience helping students plan, borrow, and repay, whether you’re working domestically or abroad.