Can I default on my student loans if I move to another country?

I am moving away from the USA and I don’t really plan on coming back.

What are the consequences if I stop paying my student loans?

My current debt is ~50,000 USD in federal loans.

I know next to nothing about this subject, so any information would be insanely helpful.

Please provide sources with your answers.


I ask this question out of necessity, not because it’s something I’m proud to have to do.

I don’t earn a lot of money, I don’t have savings, and I own nothing of value. I can just barely afford to pay the loans each month as it stands.

I have no idea what sort of income I’ll have after I move, I just don’t want student loans to be the thing that keeps me locked down in the USA.

My thought process is: If there’s no significant consequence for defaulting on the loans, I’ll be hopelessly scraping to make the payments each month for no reason other than to save grace.


Concerns:

  • Does USA credit score transfer to other countries?
  • Will someone come after me?
  • Could I be extradited?
  • Would I be arrested if I ever came back to visit a family member?
  • Would someone go after my family to collect the debts? Can they do that?
  • Could the USA somehow garnish my pay in another country?
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One Response to “Can I default on my student loans if I move to another country?”

  1. You should really talk to a lawyer about criminal concerns. There may be some.

    Does USA credit score transfer to other countries?

    The USA doesn’t do anything with credit scores. In the USA credit records are maintained by private companies who provide the information to your creditor. There’s no legal limitation for the creditors to be within USA, only that you allow access.

    So bottom line – technically it is possible for foreign creditors to get that information. If you don’t have local credit score, it is likely that they will.

    Will someone come after me?

    Depends on the loan managers. Civil suite is possible, since you cannot discharge student loans in bankruptcy. How likely is it? Probably not very likely.

    Could I be extradited?

    Only if a criminal complaint is filed and the country you’re at has an extradition agreement with the US.

    Would I be arrested if I ever came back to visit a family member?

    I’m not sure on this. I believe it is possible for a lender to have your passport taken by a court, but I don’t think you can be actually arrested unless there’s a criminal charge. But as I said – I believe your passport may be taken away from you when you come to the US, to prevent you fleeing without paying the debt.

    Would someone go after my family to collect the debts? Can they do that?

    Unless they co-signed, or they have control over your assets – unlikely.

    Could the USA somehow garnish my pay in another country?

    Yes, if a court decides so. That would have to be a court in that country though.

    In addition:

    The US can freeze your assets abroad if you keep them in a FATCA-compliant institution (which is almost any bank, nowadays).

    Also, when you die, the US may (and probably will) demand a portion of your estate to pay the debt.

    Talk to a lawyer about additional issues and concerns.