Question:

Dear Steve,

I have about $50,000 in private student loan debt (Navient) and about $50,000 in federal student loan debt. I graduated with my masters 13 years ago. Up until February of this year I had been paying my monthly payments dutifully (other than a forbearance period early on in my repayment plan).

I have barely made a dent in my debt. I live in Norway and have done so for 11 years. I had a few years where my life got very jumbled (depression, unemployment, career change, separation/divorce, death in my family as well as other deep family drama).

Despite this life stuff I was still making payments but each month I was having to use my credit card for groceries or other essentials and I finally got tired of living this way.

I was able to put my Federal Loans into IBR plan and as I live overseas and have used the foreign income earned tax clause to my advantage and have gotten my payments to 0.

This I have to renew every year and they are unfortunately serviced by the same lender as my private loans. My private loan lender was unable to do anything to help me lower the private payments. Now after 7 months of non-payment I feel collections is going to heat up. I do not have family that can help me. They have their own financial crisis to deal with.

I am angry about my student loan debt. I am angry at the system. I am ashamed that I’m nearing 40, fully employed I don’t earn enough to feel I am living life and I am not someone that has any desire to live extravagantly – most things in my house and closet are used and I like it that way.

Quite honesty only since I’ve stopped paying on my student loans have I been able to feel that I have an income to pay my mortgage, utilities, metro card and once in awhile go out for dinner.

Can my private loan lender refuse to honor my federal loan IBR plan? How is that affected by my not making payments on my private loans. And is there anyway that my student debt in the US can follow me here, i.e. my student loans be sold to an international/Norwegian lender? What can I expect to happen and are there any other options you see for me?

Marie

Answer:

Dear Marie,

These situations are entirely frustrating.

Your account is managed totally separately between your private and federal loans. While your private loans may be held by Navient, they are a contract servicer for your federal loans.

As modern of a world that we live in there is little to no international collections for these U.S. debts overseas. I never see it happening. Your debt in the U.S. should not impact you at all in Norway and it will not prevent you from returning to the U.S. to visit. It will not even impact your Norway based credit rating.

The fact you are outside the U.S. actually gives you some negotiating leverage. I would suggest that when the time is right you talk to a good student loan attorney, like these folks, or a debt coach like Damon Day to help advise you through the process.

Your private loan company, Navient, can always sue you for non-payment and if you had any U.S. bank accounts they could identify if they sued you and won a judgment, they could try to levy those accounts.

However, being sued over the loans is not the end of the world and has become a great opportunity to negotiate a settlement.

The best advice I can give you is to either just stick your head in the sand and forget about your private loans unless or until something comes up, or contact someone you know or one of the folks I mentioned and get a knowledgeable third party to run interference for you to work towards a solution with the private loans.

On the federal loan front, just keep doing what you are doing with the IBR.

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