Opportunities to travel out of the US and spend some time on foreign soil can bring thrilling experiences. However, it also has its tough sides, especially if your finances are from a student loan. You will then have to repay your loan eventually, and you should have carefully considered this and made your strategy before you even travel.
With proper planning and preparation, you should not be hindered by your loan from having fun to the fullest. While living abroad, you can be well informed of the status of your loan and thereby, channel your planning correctly. This article gives you an outline of things to set in place before you prepare for your journey if you intend to live on a student loan; we will explain ways by which you can ensure early repayment while also providing convenience.
Setting up an automatic withdrawal is one of the best ways by which you can make sure you both pay up your loan and do so on time. Most direct lenders have an online website on which you can create a profile. When signed in, you can then choose the option of automatic payment. A lot of services give bonuses in the form of discounts to users of automated payment. All you'll need to do is give your bank account and routing numbers, with your bank's name.
When an automatic payment is set up, the lender will take out a particular pre-stated amount as a fraction of your overall student loan for payment, usually at a monthly interval. With this method active, your physical or online presence is not necessary. You don't have to mail a check from abroad or worry over being late on a payment. This payment method is particularly applicable to very busy people who might be preoccupied and are prone to forgetting due dates for payment.
Linking Your Home Account with an International Bank Account
To pay in the first place, you must have funds present. To make payment easier, it is advisable to create an international banking account and link it with your American account beforehand. While several banks are international, some are only native to American soil, and bank transactions done outside the nation can be expensive for these. Creating and linking an international account with your home account would eliminate the high transaction fees and give you access to your money while overseas.
Automatic withdrawals would be done on your American account. So, linking them to your international account would enable you to refund and control the account from wherever you are. However, make sure your US bank permits international transfers in different currencies from banks abroad. It is advisable to put a substantial amount in your home account to serve as a baseline for repayment until you fully understand how to operate the connection of the two banks from abroad. This would ensure your payments are made promptly and give you time to come to grasp with running our accounts via their link. It is possible that you might be working and making money while you are abroad. If that's the case, make sure you can deposit those funds into the account.
Fusing Your Loans into One
It is an excellent idea to combine your loans into one, especially if you are on more than a student loan. This can be done through a private lender who settles all your loans and takes them on as your loan to him/her. This would also allow you to set up different payment conditions and terms. This process is called refinancing and can help you save money via lower interest rates than the original loans had. If you want to settle your debt quickly, a new repayment time can be set up that is shorter. And if you're going to reduce the monthly amount withdrawn, you can extend the repayment time.
This setup comes with the following consequences; however; government help and amnesty are nullified. It is a good fit for those with a constant and secure income source, though. When considering refinancing, do a background search on the private lender, because not all of them support lending to people abroad. It is a good idea to set up refinancing before you travel abroad. Your being there in person will make the process faster rather than communicating online.
When Making Payments is Hard
Sometimes, you might be going through difficulty making your payments on time. An excellent option to consider is the income-driven repayment plan. This strategy helps to stretch your repayment time to between 20-25 years, effectively significantly reducing the amount you pay monthly. For those working abroad, this plan can be used to reduce your fees per month significantly. This works because the income-driven plan lowers the payments made per month using your fixed income amount for which tax applies.
However, keep in mind that while the income-driven repayment plan can make the monthly payments very little, it has a consequence. Too little means you are not making headway in settling the principal on your debt. Over a long time, the interest acquired could reach significant amounts. It is advisable, therefore, to get professional help to gain an understanding of all the ins and outs before taking up the income-driven repayment plan.
Don't Miss Your Payments
It is very easy to get carried away with the new environment and fun you are having. If you are staying for a while, you are possibly learning a new language and trying to make yourself feel at home. With so much to focus on and set up, you might find yourself forgetting about your student loan. However, keep in mind that your relocation abroad will not nullify your loan, and failing to make payments on time will come back to haunt you as it has long-term consequences. Some consequences of defaulting on loan payments are outlined below:
•Your credit score gets a red: This would make taking future loans or mortgage very difficult; no lender wants to give funds to someone if they are not sure he or she can pay the money back.
•This can also have severe consequences on your home income and social security if the lender involves the government, the result being major obstacles in your finances when you are back home.
It is possible that paying back your student loan might get difficult due to unforeseen circumstances. However, defaulting on payments is not the way to go, unless you choose never to come back home. You most likely will, however, so instead of creating problems for yourself, consider refinancing steps or activate an income-driven repayment plan beforehand.
These steps can help reduce the monthly financial strain on you by spreading payments over a longer period. In the end, you would be able to repay your debt at your comfort level. It is essential to follow the steps outlined above and set them into motion before you even travel abroad. This will give you peace of mind, and you can have all the fun you desire without strain.