Students ditch loan debt by moving overseas, even when payments are as little as $60 per month

A report from The New York Times breaks down a growing trend of student loan borrowers leaving the United States and abandoning repayment altogether, as delinquency and default rates climb to levels not before seen.

According to the report, more than 40 million Americans hold federal student loan debt, with roughly 7.7 million now in default. While most borrowers remain in the system, some are opting for a more drastic solution by relocating overseas, putting distance between themselves and American collectors. 

The report goes through several cases of borrowers who made the decision to leave after struggling with repayment.

Amanda Lynn Tully, for example, moved to Prague after graduating with approximately $65,000 in federal loans. She had been on an income-driven repayment plan, making monthly payments of about $60, before ultimately defaulting. She has not made a payment in more than seven years. The report notes that even relatively low monthly obligations have not been enough to keep some borrowers engaged, particularly when payments fail to reduce the principal balance.

Others faced significantly higher monthly costs. One borrower cited in the report had payments exceeding $600 per month on roughly $80,000 in debt before eventually moving to Southeast Asia. After initially continuing to make minimum payments, he later stopped entirely once he had established himself abroad.

Beyond finances, the report indicates that many borrowers pointed to the psychological burden of long-term debt as a major factor in their decision. Some said that living overseas allowed them to maintain a higher quality of life despite earning less income than they would in the United States. Several individuals interviewed said they do not plan to return.

While exact figures on how many borrowers have taken this route are unclear, the report notes that online forums have seen increasing discussion of the strategy. At the same time, experts warn that defaulting can carry serious consequences, including severely damaged credit and limited access to financial services.

The report also points out that alternatives exist. Certain income-driven repayment plans, combined with tax provisions for Americans living abroad, can reduce monthly payments substantially, in some cases to $0, depending on income levels. Despite this, some borrowers continue to default, suggesting that the issue extends beyond affordability alone.