We Are Moving Out of America. Can We Just Leave Our Student Loans Behind? – Anouck

“Dear Steve,

I’m a Dutch citizen, my husband is a US citizen. He has federal student loans on his own (approx. $20K), and I co-signed for his private student loan with Sallie Mae (aka The Devil) for about $40K. We have filed for Chapter 13 and are currently not making payments. We are planning on moving to the Netherlands (most likely permanently) at some point next year.

Once we move to Europe, we will both (at first at least) be unemployed. Obviously, we would not be able to make payments. If we decide to permanently stay there, what would be the negative side of us not making payments? We will have no family left in the US, nobody for them to contact. I would love to get rid of the debt, but with the interest rates they charge, it just seems impossible. I was under the impression there is no way to get rid of private student loans, but you mentioned a SOL in a different conversation. Is that an option for us? And how would we find out more about that? We are currently in CA. Thanks!


Dear Anouck,

I happen to love the Netherlands. I’m jealous. Good luck on your adventure.

On the private student loan front, the loans will go into default, and I doubt they will try to collect internationally. Even though we live in a modern world, international collections almost never happens.

After the statute of limitations expired in the state you last lived in the loans would still be owed but the lender would not be able to take legal action. To determine exactly what the SOL exposure would be for you, I would advise you consult with a California licensed attorney for a specific answer. The statute of limitations is not a clear cut issue. A number of factors can start and stop it. An appointment with the attorney will be money well spent.

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Of course Sallie Mae could always decide to sue you at some point in the future before the statute of limitations expired. Since you would not be around, you’d probably lose and they would go for a judgment they would not be able to collect on. But then you’d always have the argument that you were not properly served if you wanted to fight it later.

So the short answer is, nothing. None of that will prevent you from coming and going to America for visits and such.

The federal loans are a different issue. They do not have a statute of limitations. If at all possible, I’d suggest paying those off before you go. Here’s why. There might come a time when you may want to come back to America in ten years to live. Nobody has a crystal ball about what the future brings.

The private student loans will most likely not be a factor by then. The federal loans on the other hand will have gone into default, had a 25% collection bounty tacked on to the balance, and interest will continue to build up. That $20,000 debt today can become a $100,000 monster before you know it.

Alternatively, you could always contact the Department of Education on the federal loans after you leave and try to get on the income based repayment program. With no income your payment could be as little as $0 per month. Each year you’d have to go through an income evaluation process and agree to a reasonable and affordable repayment. See this publication for more details on all that.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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