4 Shares 4



0

0







According to Marketwatch, America’s student debt grows by $2,726 every second. Their website even has a student loan debt calculator that makes steady, glitchy jumps. At last check, it was a cool $1,331,208,862,207. Any debt that reaches $1.3 trillion is unmanageable, especially for students.

The promise of college is to receive an education--the promise of student loans is to repay them based on the education one receives. Yet research from the New York Federal Reserve into the burgeoning debt crisis shows that only 37% of borrowers are paying down the debt. This means that a larger percentage are only breaking even--that is, paying the interest and not the principal. And others are leaving the country, in hopes that they won’t be harassed to pay off their exorbitant, government-subsidized loans.

The thinking goes, once you are out of the country, items normally affected by failure to pay back debts--credit cards, mortgages, car loans--are out of reach from loan companies. The government can’t seize your wages nor really hold you accountable.

Speaking to Vice News, self-described student loan expert Mark Kantrowitz explained it as such: "The federal government doesn't have really strong tools for collecting debt from people who move overseas," adding "In theory, you could live the rest of your life in another country."

The question of what happens to a debt-dodger upon returning to the U.S. is not quite clear, but judging from forum discussions on Credit.com and elsewhere, crushing student loan debt and failure to find the well-paying job they were promised has students giving serious consideration to their alternatives.

The Credit.com blog quotes publisher of “Live and Invest Overseas” Kathleen Peddicord as saying she’s met many of these people over the years, indicating the phenomenon is not so new.

“I meet them in Panama, Ecuador, Belize. Their financial lives got away with them. They were upside down on rental properties. Their credit card debt became overwhelming,” Peddicord says.

She warns, however, that financial problems do not disappear. “It’s not an Etch A Sketch,” she says.

The article goes on to give three tips for moving abroad in order to escape debt obligations.

The Vice News article interviews four American students who have done the same recently.

31-year-old Zoe, $35,000 of student debt, is profiled in the piece. She recounts getting a D in one college class, which effectively canceled her scholarships and forced her to take out and then refinance student loans.

The usual struggle to pay ensued and eventually Zoe moved to Europe. “Once you move abroad, you just kind of turn off that whole part of your life off. They can't touch you; you're elusive,” she says.

Most interestingly though, is that Zoe is halfway banking on a rumored student loan forgiveness program proposed by President Obama. She asks rhetorically, “I guess I'll continue at this rate until they go away? I don't mean until I pay them off. I mean until the government's like, "You don't have to pay those loans anymore, you millennial! We know you're not good for it."

She is talking about Obama’s Student Aid Bill of Rights, implemented in March 2015, which theoretically directs the Department of Education to propose manageable repayment options to borrowers.

Some of these steps include replacing bank subsidy plans with the Direct Loan program--in other words, the federal student loans which once went through a middleman bank-affiliated loan company, now go directly from the federal government.

It also includes the Pay-As-You-Earn plan, “which places a 10-percent-of-income cap on federal loan payments,” according to the Huffington Post.

But while these measures are welcome, as yet, no student debt relief program has been passed. Considering the dire effect widespread crippling debt will have on the economy in the next ten years, it may be the right time to fix this problem.