Many student-loan borrowers have fled the U.S. to keep from paying their loans.
Those who remain in the country are struggling to repay their debt. According to Bloomberg, student loans have the highest 90-day delinquency rate of all types of household debts. These loans include auto loans and mortgage. Some economists say that by 2023, almost 40% of borrowers could default on their loans.
Experts say those who chose to move overseas to escape student debt would face a risky ordeal. If such people want or need to return to the U.S., they will find that the balance of their loan has swelled while they were abroad because of compound interest, collection charges, late fees, and a slew of other charges.
Even though the U.S. Education Department typically has no power to settle a debt from someone’s wages if they’re working outside of the U.S., it can take almost 15% of their Social Security benefits.
Instead of fleeing from student loans, Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities, advise borrowers to take more reasonable ways to deal with their debt.
Struggling borrowers can apply for one of the government’s income-based repayment plans. This plan allows their monthly bill to get capped at a portion of their income, he said. Some payments for this payment strategy can reach as little as $0 a month.
The country’s outstanding student debt has tripled over the last decade. Economists projected it to swell to $2 trillion by 2022. Currently, the median debt at graduation is roughly $30,000, nearly double the inflation-adjusted amount of $16,000 in the early 1990s. Meanwhile, the wages for new bachelor degree recipients have remained almost unchanged over the past few decades.
Alan Collinge, the founder of the advocacy group Student Loan Justice, said the fact that people are taking this drastic measure should signal the government to scrutinize the broader student loan system.
Student debt would likely be one of the primary topics in the 2020 presidential debates. Sen. Elizabeth Warren, a Democratic presidential candidate, has come up with a plan to eliminate student debt for 42 million Americans by taxing billionaires.