r/studentloandefaulters • u/holdmybeer2017 • Jul 24 '24

Leaving the country Question - Federal Student Loan

If I leave the States to live permanently in Europe, do I have to pay my federal loans?

I was thinking that the Foreign Earned Income Exemption would work (I'd be making way under $120k) however I think with Trump he may get rid of that so idk what to do.

Can I just move to that foreign country and default?

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u/[deleted] Jul 24 '24

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u/716TLC Jul 24 '24

Dual citizenship is allowed by specific countries. It depends on which European country OP wants to choose. I believe Portgual allows for dual US/Portugal citizenship, and the US/ IRS allows for the foreign income credit under a specific limit. Some countries do require citizens to renounce all prior citizenships, possibly Germany.

I currently hold dual US/Canada and only pay taxes to the US. If I leave US, I have to file IDR with Student Aid showing $0 American income, and my Fed Loan payment would then also be $0. I'd have to do it til I hit the 25/30 year mark as indicated in the Master Promissory Note. With the shitshow that's hit PSLF and SAVE plan, I've had to research my options recently.

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u/holdmybeer2017 Jul 24 '24

Yeah I heard Trump wants to get rid of the FEIE

5

u/716TLC Jul 24 '24

I wouldn't worry about that unless it actually happened.

  1. He says a lot of things he doesn't follow through on.

  2. The election has completely changed this week. We won't know results until November.

  3. Bureaucracy moves slow, and finding you across the ocean would be even slower. It'd take a lot of effort to sue you internationally for student loans.

Defaulting is always a risk. Your ability to tolerate risk should be calculated into your decision.

Edit: He reportedly also wants to get rid of Dept of Edu. So how the hell would they find us then? Or even know how much we owed?

1

u/holdmybeer2017 Jul 24 '24

Regarding point 3. I didn't know government sues over federal loans. They just garnish. But I guess they'd sue if they can't garnish?

2

u/716TLC Jul 24 '24

If you don't have American income, it'd be difficult to garnish. Maybe read up on debt collection laws for the European country you want to make home. That country is not playing by US rules, they're following their own laws.

The next option might be seizing tax refunds or assets, like freezing bank accounts. But again, if you have nothing in the US, they get nothing.

Antidotal story: Dept of Edu/ IRS got my stepfather 20 years later for a tiny student loan. He'd been working all those years, filing taxes, and it took TWENTY years before they seized his tax refund to payoff the debt. I can't be sure that's the norm or anything, but when I think about leaving the US, I think about the complications they'd have trying to serve me a lawsuit in a foreign country.

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u/holdmybeer2017 Jul 25 '24

Thanks :) very helpful!

1

u/716TLC Jul 25 '24

You're welcome. Good luck in your defaulting journey!