Graduation is an equally exciting and intimidating time in your young adult life. As the colossal build-up to your graduation ceremony rolls around, you’re constantly faced with the tough question: “So, what are you planning on doing with your life after you graduate?” Trust us – you’ll hear this a million and one times!
Some graduates, of course, have a job lined up or are planning to attend graduate school soon. If you want to start working, but you don’t want to say goodbye to your youth just yet, we have a solution here at Teach Away.
Why not teach English abroad? All you need is your degree and rad English skills (plus a TEFL certificate to demonstrate your English teaching know-how).
Teaching English abroad can be an amazing experience. International work experience also looks pretty darn good on your resume (no matter what career path you decide to do after) and it’s super easy to get started.
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- What qualifications do I need to teach English abroad?
But there’s no denying that moving abroad to teach English as a freshly-minted (and broke) grad also presents its own challenges – especially when it comes to those pesky student loan repayments.
For many recent grads around the globe, student loans are considered a necessary evil. College debt in the US hovers in or around $37,000 USD per person, while UK graduates are on the hook for around £50,000 GBP. The average Canadian university grad accrues more than $26,000 CAD in student debt. Student loan debt might be causing you more sleepless nights than those final exams did.
Just remember, all that expensive education is a worthy investment in your future. It helps you achieve the means to repay the loans later on in the working world, so it’s not all doom and gloom.
If you graduated with student loans, you might feel like living and traveling in another country for an extended period of time is out of reach. But don’t worry, you can absolutely teach English abroad and still stay up to date on your student loan repayments.
Read on to find out how!
What to do with your student loans while teaching abroad
Before you pack your bags, you need to have a plan in place regarding your student loans. As long as you’re prepared, your debt doesn’t have to stand in the way of your travel dreams or cause you any financial trouble. In fact, teaching English abroad can actually help you make your debt go away faster than you anticipated!
One of the first things to do as a new grad facing student loan payments is to get organized. Figure out exactly what student loans you have and who is servicing them. This is all stuff you may have buried your head in the sand about during your college years, and that’s totally understandable. But now’s the time to make sure you know what your balance, interest rates and monthly payments are, as well as when your grace period ends.
Here are your two main options when teaching abroad with student loans:
- Pay off your student loans with your killer salary
- Defer your student loan repayments
Option 1: Apply for a forbearance or deferral before heading abroad to teach
Student loan deferral for teachers abroad:
This basically means putting your student loan aside and not making any payments on it for a specified period of time agreed upon between you and your lender, without accruing interest.
If your loan is unsubsidized, you can still postpone payments, but just know that interest will accrue during the deferment period. It may be helpful to pay this interest off during the deferment period, to keep you from having this extra debt added to your overall debt – although this isn’t strictly necessary!
If you qualify, student loan deferral is a good option if you feel more comfortable without lartge repayments hanging over your head while you’re living abroad. As well, deferring your student loan will not affect your credit rating or negatively impact your chances of getting other loans in the future.
This option is more likely to be approved by your lender if you’re teaching abroad with a volunteer organization, such as the Peace Corps. Because you’re not technically earning a salary while volunteer teaching, you could even be eligible for a deferment on your loan for up to three years.
Student loan forbearance for teachers abroad:
Forbearance is another option if your loan provider isn’t able to grant you a deferral. With a student loan forbearance, you can stop or reduce the monthly payments on your loan for up to 12 months. You will, however, still accrue interest, regardless of whether your loan is subsidized or unsubsidized.
Of course, it’s best to check with your loan provider to see if you qualify for a deferral or forbearance and to go over finer details of each option to see which works best for you. These options exist for a reason – there’s nothing to stress about as long as you have a plan in place for when you do start up your repayments.
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Option 2: Paying off your student loans while teaching abroad
With some basic financial planning and budgeting, it’s possible to put a decent percentage of your salary towards your debt while teaching English abroad.
Researching the right teaching destination is vital, though. If paying off your loan is a priority, we recommend focusing your job search on the countries with the best saving potential while teaching abroad.
Focus your ESL job search on regions where you can save tons of money.
Rather than focusing on your ESL teaching salary in isolation, it’s important to review your pay and benefits in the context of the overall cost of living wherever you’ll be teaching.
Countries in Asia, especially Japan, China and South Korea are all perennially popular choices for new grads looking to teach English abroad. These countries offer heaps of well-paying English teaching jobs and relatively low daily living expenses, making it easy to save several hundred dollars a month to put towards your student loan repayment. All the way up to 60% of your take-home pay, in fact.
Many language schools in China will also cover your housing costs, making it easier to put more money into savings each month, rather than frittering it away on rent.
English teaching jobs at international schools in the Middle East are also some of the most lucrative in the world when it comes to salary and benefits. You can earn over $4,000 a month (often tax-free) and take advantage of incredible perks, like free accommodation, paid vacation and medical coverage. One slight caveat is that countries in this region often come with a significantly higher cost of living. Requirements to teach English abroad in the Middle East are also a lot stricter and employers usually prefer to hire licensed, experienced educators.
Read this: Top countries to make the most money teaching abroad in 2018
A word of advice: Not all ESL teaching locations are created equal. While the demand for English teachers is high in regions like Europe and Central and South America, and you can earn enough there to live a decent lifestyle and travel on the side, you probably won’t have a whole lot left over to put towards your student loan repayments.
If you decide to go with this option, be sure to do the following things:
Step 1. Set up autopay on your student loans.
That way, you can be sure you never miss a payment while abroad. You also don’t have to worry about remembering to send checks home on a monthly basis, either!
Step 2. Set up an international bank account and connect it to your home bank account.
Because you’re earning money overseas, you’ll probably want to set up an international bank account. At this point, you can link your domestic bank account with your new international bank account. That way, your student loan provider can withdraw funds from your home account – all you have to do is set up auto transfers once a month to cover your student loan repayment.
Bonus: By setting up and international bank account, you’ll also avoid having to pay hefty foreign transaction fees during your time teaching English abroad!
If you’re from the US, there’s another key benefit to teaching English abroad with students loans. You won’t have to pay taxes on income earned back in the old US of A, so long as you don’t make more than $101,300 in a year.
While you will still have to pay local taxes on your teaching salary, these are usually much lower than comparable tax rates in the US (as low as 3% in South Korea). This means that paying off your student loan could be far easier as an English teacher abroad, as opposed to your average entry-level job back home.
Read this: Tax timeout: tax responsibilities for teachers heading overseas to teach
Teaching English abroad: A great way to pay off student debt!
It’s easy to get caught up in the stress of having student loans hover over you when you want to work and travel abroad. But it’s important to keep a clear mind and remember that lots of new grads just like you make their travel dreams a reality every year by teaching English abroad!
Pro tip: If you’re concerned about how you’re going to save up the additional $1,000 for your TEFL certificate with that impending student loan looming over you, you can always hit your TEFL course savings goal AND get some real-world teaching experience for your ESL resume by teaching English online for as little as a few hours a week.
Remember, you’re in your early 20s with little-to-no responsibilities, no one relying on you and no one to answer to. You’re also probably still living at home with your parents so you have no rental agreement to break or mortgage to pay off. In short, no one really cares what you do (we mean this in the nicest way possible).
Right now is the only time in your life you can drop everything and build a whole new life for yourself abroad. Adulthood will come one day, but it doesn’t have to be now. And regardless of whether you go abroad or not, your student loans will still be there. Use this as an experience to learn to manage your own finances and discover more about yourself and the world by teaching abroad.
For more student loan advice from the experts, check out the following resources: