Thursday, June 18, 2015

Testimonials from Debtors Who Have Fled the U.S.: "I am a US expat who is 'a student loan debt fugitive'"

As I have in the past, I threw out a basic question last week: who has fled the US as a result of their student loan debt?   I also asked the exact same question a few years ago - 2012 to be precise - and received a number of responses. Moreover, in 2011, I wrote an article for USA Today titled, "Unemployed, educated, and indebted: More Millennials seeking work outside the U.S."  So it is clear, the topic is not a new one for me. Interestingly, this particular topic intersects with individuals who have high levels of medical debt, something that interests me greatly and something I am keenly aware of, despite what adversaries may claim either here or elsewhere. In any event, I want to share a recent comment from one person who decided to flee the U.S. 

There is a growing group of debtors who have left. That is clear. I knew them in South Korea when I lived there in 2010. That isn't the only place they go. While the debtors I knew there hadn't defaulted, I think it is safe to say that they fled as a result of their student loan debt. Plus, the economy was in the tank, so they needed to find work in order to service their student loan debts (Ah, yes! America, a place where you get an education in order to service debt so that some guy can own a lot of Maseratis and numerous homes in the Hamptons and elsewhere, while millions of folks remain indebted for life. That's the American dream).

Anyway, there is another group of debtors who have chosen to default on their loans and apparently flee indefinitely. One of them, who wrote a comment, and which I share his remarks below, calls himself a "student loan debt fugitive."

Here's what he had to say:

I am a US expat who is a 'student loan debt fugitive.' There are many of us here in the EU. 
If anyone wants the full text of what I typed. let [sic] me know your email or something. but here is a small piece of my total comment:

I am living outside the country with US student debt. I won't bore you all with my story, but the end game is I cannot possibly pay it back. Even if I were to enter IBR the amount forgiven would be equal to hitting the lottery and having to pay taxes on that amount would be insurmountable. In my not always humble opinion IBR is a political scam to basically kick the can down the road without actually forgiving debt. What it does is turn a civil debt into a criminal tax liability. 

Anyway, it is pretty obvious I am in default. I graduated 3 years ago and my roughly monthly net pay was not going to pay my medical school loan. I attempted to contact my creditors and work out a plan and both the federal and private lenders basically told me I could get a short term relief, but there was no solution for more than a year. They also straight out told me they had absolutely no incentive to negotiate because 'they would get their money one way or another.'

The country I am in does discharge student loans in bankruptcy. In fact, a judge can declare you bankrupt on the spot. My estimated monthly student loan payment is more than 3 times a doctor's gross salary here.

No court here would accept the amounts and penalties the US imposes. In fact, the law here has its own ideas what is an acceptable penalty and they do not include collection or attorney fees. The interest is modest at 6%. So when my creditors called I simply said 'sue me!' (I may have mentioned that any lawsuit must be in the native language and filled out in the requirements of the local law.) The reality is nobody in their right mind from the US would sue me here. They would pay enormous fees for translation and local legal aid, to watch me be declared insolvent on the first court appearance. The statute of limitations for suing over debt here is 3 years anyway, so in a few months I could just claim that.

I actually encourage people, if you can't pay your US student loans, pack up and move. I think it is foolish not to. Sometimes I feel bad about not being able to pay the money back, but I suspect just like homesickness, it will fade with time.

I know that lenders, the government, or private, have absolutely no remorse about any immorality they subject me or my family to. They created laws to benefit them. I moved somewhere that the laws benefit me. They are more than welcome to call and negotiate a reasonable settlement. But I suspect they really just don't want to bother. Neither of us has any incentive to give concessions to the other. I keep hearing that my life would be destroyed if I moved back to the US. But honestly... Move back to what? Difficulty renting a place to live? Difficulty getting a job because of student loan default? Pay garnishments? Shame? Not getting my drivers' license renewed? Not being able to have a professional license? Harassed non-stop by creditors? Give up my legal advantage? A lower quality of life and more expenses for my family? 

That is insanity. Why would anyone go back to that?

16 comments:

Anonymous said...

Good riddance, I say.

The US has way more people riding in the cart than there are out front pulling.

Clearly there is nothing that will get you to pull the cart. At least this way, you won't be riding in it, either. I'll take that deal.

Anonymous said...

Anonymous,

There are many of us out there who, thanks to usury, have repaid student debt with interest, yet we still owe nearly what we allegedly borrowed. This isn't like a car loan where you actually watch your balance decrease month after month, year after year. You pay student loans for decades and nothing ever changes. It seems that we are the people who are really pulling the cart, as you say, while people like you enjoy self-righteous ignorance.

Leaving one's country for asylum is a pretty extreme measure. I don't think anyone leaves behind family, friends and the only life they ever knew unless something truly heinous and hopeless has compelled them to do so. Your attitude is so sociopathic... I fear for our future.

Have some compassion. You never know when you're going to need some yourself.

-B

John K said...

Again I will say that the Student Loan Debt situation is a financial bubble and hardly amounts to political persecution in my experience, and as compared to history and diaspora, such as the Irish Diaspora and in a general sense.

Captain Thompson

My mind being much inclined to cross the raging main,
I left my tender parents in sorrow grief and pain,
On board the Fame we thus became all passengers to be
Along with Captain Thompson to the land of liberty.

As we were safely sailing to a place called Newfoundland
The wind arose ahead of us, and our ship was at a stand.
"All hands aloft," bold Thompson cries, "or we'll be cast away.
All firmly stand or we ne'er shall land in the North of Amerikay."

A mount of ice came moving down anear our gallant main
But the Lord of Mercy He was kind, and our lives He did maintain
Our gallant sailors hauled about and so our ship did save
Or we were doomed to be entombed in a doleful watery grave.

When we were fairly landed our faint hearts did renew;
But how could I sleep easy, dear Erin, far from you?
I hope the time will come again when our comrades all we'll see
And once more we'll live together in love and unity.

From Irish Songs of the Sea, Healy

https://www.youtube.com/watch?v=ZtcGECq39fM

Cryn Johannsen said...

John K - you are wrong. It is a form of political persecution through economic punishment.

Anonymous said...

It's an unsecured debt, just default on it. If everyone defaults, it all just gets forgiven. heck even if 25% default, the terms change to be fairer to borrowers, which is essentially what happened with the foreclosure situation several years ago. But that was secured debt, there's really nothing for unsecured debt.

It's foolish to flee to another country, unless you just can't get a decent job in the US but can somewhere else. The EU has a far better QOL than the US, that would be the reason to go. Far better labor laws too.

Heck even Mexico deports more people than the US now. The US is pretty much finished, just don't pay and accelerate it, or if you're smart yes you can leave, like rats fleeing a sinking ship.

John K said...

But IBR/ICR won't come home until 25 years after it was created in 2008 I think it was? So lets just say around the year 2030 ( I will be 65 years old) the very first loans will be forgiven under those programs. Then comes what some have called, and for quite some time now, the "tax bomb" where the forgiven debt is regarded as income and so money will be owed to the IRS on the forgiven amount, no matter how hyper inflated from the original amount borrowed.

Is that is what is being implied as a criminal punishment and persecution?

Or does the "persecution" come from the revocation of a drivers license? Or from the revocation of a professional license? And where and to whom has this been done already? There must be documented stories?

Alls I am saying is that 2030 is a long way off, and youse people can talk about the horrors to come, but in the meantime does anyone really not think this is a bubble and that it can grow unchecked to 2 trillion? Or 3 trillion?

After a while it all seems like the theater of the absurd.

The housing bubble came to an end on one single day, and my guess is that this one will come to a head and won't be able to sustain itself as more and more retirees struggle in conditions of near poverty or poverty in fact because of the coming conflict between social security benefits and debt for education.

So good luck with the troll Cryn that I told you about. I'm sure he is trying. Oh how he does try :)

As far as PSLF goes, there is plain language on the government website that says it can be done away with by Congress at any time, though not likely, and that is a whole other issue and story.

The Celtic band called "Trian" has a nice version of the Captain Thompson song as well. The link I posted was the best I could find.

Anonymous said...

Let my just offer another idea:

We live in a global economy. So maybe American Student Loan debt is actually owned by foreign banks and companies to a greater or lesser degree?

It is not a hard guess to make, and sure would explain a lot.

But what do I know? No one around here is an expert on economics or finance, and certainly not the MD.

Assuming that possibility, it would make sense that Congress cannot help really and even if well meaning Congress people wanted to help what with their hands being tied by global finance and bundled packages of debt being traded every day and for profit.

And so the debt may well grow to 2 trillion or more.

That said, one is really not going anywhere on the globe of one wants to physically escape.

But I'm completely wrong of course, and this little article is just food for thought. A good read though.

http://www.dollarsandsense.org/archives/2015/0515soederberg.html

John K said...

Let my just offer another idea:

We live in a global economy. So maybe American Student Loan debt is actually owned by foreign banks and companies to a greater or lesser degree?

It is not a hard guess to make, and sure would explain a lot.

But what do I know? No one around here is an expert on economics or finance, and certainly not the MD.

Assuming that possibility, it would make sense that Congress cannot help really and even if well meaning Congress people wanted to help what with their hands being tied by global finance and bundled packages of debt being traded every day and for profit.

And so the debt may well grow to 2 trillion or more.

That said, one is really not going anywhere on the globe of one wants to physically escape.

But I'm completely wrong of course, and this little article is just food for thought. A good read though.

http://www.dollarsandsense.org/archives/2015/0515soederberg.html

Anonymous said...

John K said...
"But IBR/ICR won't come home until 25 years after it was created in 2008 I think it was? So lets just say around the year 2030 ( I will be 65 years old) the very first loans will be forgiven under those programs. Then comes what some have called, and for quite some time now, the "tax bomb" where the forgiven debt is regarded as income and so money will be owed to the IRS on the forgiven amount, no matter how hyper inflated from the original amount borrowed. "

Also, at that point the federal government will have to make payments to banks to retire that debt. There will be a strong incentive to not do so, to shut the program down. And from my casual understanding, the federal government is not obligated to continue IBR - they could shut it down at any time. At that time, there will be strong pressure.

-Barry

Anonymous said...

I was thinking about all of this the other day...

Since we are globalizing, I kind of think that fleeing one's country to avoid debt might work now, but I have a sneaking suspicion that in the future, extradition laws for debt are going to become more strict.

It makes sense to me that other countries probably own this debt. Regardless of who lent the money, why did our leaders let this get so far out of hand? They are educated people. You can't tell me that they didn't see this coming.

-B

Anonymous said...

ALL B.U.L.L.S.H.H.H.

Since 2010 the Department of Education has been getting the cash it lends to students from earmarks of US Treasury borrowing.

The federal government borrowed the money it lent to students, and everyone in the country (who is a taxpayer when those US bonds mature) owes that money right now and in the future.

Those who think borrowers who cannot afford their loans should nonetheless be pursued into poverty for the rest of their lives, because that protects the public coffers, should, through their crack-induced stupor, ask themselves the following:

WHAT HAPPENS TO THE MONEY WHEN WE DO PAY OUR STUDENT LOANS?

Does the Department of Education take it, and give it to the US Treasury, and does the US Treasury then pay down that public debt that went to funds the loans?

NO! THE TREASURY IS NOT PAYING OFF THE BOND DEBT! Instead, they spend that 'profit' from student loans today...leaving a bill still due FOR ALL OF IT.

So, to hell with them and their false sermonizing.

P.S. These ultra-sophisticated commenters should also go educate themselves on the Student Loan Asset Backed Security and the various bailouts of that crap.

Anonymous said...

^lol.

Any excuse to not work and pay back your loans, eh?

People like you are the reason why nobody has sympathy for student loan debtors. At least -B is trying to pay back the principal. You don't even believe in that.

Anonymous said...

Anonymous,

If I thought that people were just carelessly taking out this debt and then refusing to pay it on the basis of self-entitlement, I'd agree with you. The thing is, I eat, sleep and breathe student loans and have for the last 10 years so I know better. You are correct; with regard to my private loans, I have repaid the principal PLUS $15,000. This has been over the last 10 years and I am told that I have another 20 years of payments. I currently pay roughly $800 per month just for the loans we are discussing. In addition to these loans, I have federal loans (in forbearance, because I can't afford more right now) and my husband has federal loans with a very small private loan. I've told my story here before - I do not even recall seeking or signing for this debt. I basically just graduated one day and the creditors came calling. I have spoken to a few lawyers, all of which have told me that I literally have no recourse and due to the nature of the laws that are protecting these loan sharks, lawyers are afraid to even get involved.

In order to pay this debt (that I do not believe is mine), I have been homeless twice. I have pawned jewelry, including a very special ring given to me by my great-grandmother. I have gone to bed hungry and eaten freeze-dried food storage soup more times than I can count. I have worked multiple jobs at one time. I am 32 and have put off having a family. I have never owned a home and my husband and I share a car (did I mention he has been doing this 10 years longer than I have?). This is the kind of life you expect to live as a "poor starving college student" during which time you make sacrifices for your future. This is not the kind of life you should live for the remainder of your life because you went to college. This is wrong. I have sacrificed years of my life when I should have been saving money for retirement and checking the boxes of the typical American life (house, kids, vacations, giving to charity) working my ass off and throwing tens of thousands of dollars into a bottomless pit. However, I continue to pay under duress. The consequences of default are so severe that I'll do anything I can to remain in good standing until I just can't do it any longer. The lenders know this and that is why they lent $100,000 to a young girl earning a BA in sociology from a state university. Again, I do not recall taking this debt upon myself. I believe I am a victim of fraud or identity theft.

Since I realize how unfair this scam really is, even though I have been through all of this, I'd still be 100% fine with a new graduate having all of their loans forgiven (of course, I'd expect the same since I've technically repaid mine with interest anyway). Honestly, I am blessed to have the income I DO have. These new kids can't even find jobs with liveable wages or adequate medical insurance, let alone pay these kinds of monthly payments. How did this happen? The United States of America is better than that. We claim we believe in equality, yet we have no problem eating our young and telling them that it's their own damn faults when they cannot survive.

When we help individuals succeed, we're also helping our nation. I'll say it again. If you free 40 million people from bondage, there will be 40 million house buyers, 40 million car buyers, and millions of families begun. Everything else we've done to help our country has failed miserably and just resulted in the rich getting richer. Put the money in the hands of people who are actually going to stimulate this economy. And, most importantly, have some charity. Wishing this living hell upon someone because they took out debt they did not understand when they were still teenagers is sadistic.

-B

C. Mile' Ealy said...

Student loans are designed to aid learners in reaching their goals. However, after reading the article I can understand how individuals can become so stressed over the cost of loan repayment, and interest. What I did not know is that individuals have contemplated suicide over student loan repayment. The other solution that some people have taken is to move outside of the U.S. to forego payment, and giving up citizenship. These are grave concerns to say the least. I will be following postings, and any information related to the debt crisis. I agree that perhaps these loans could be forgiven allowing graduates to contribute to the U.S. economy rather than being seen as fugitives.
M. E.

Anonymous said...

When I read the testimony of Anonymous -B, I burst out in tears. I'm in the same boat. I only live to perpetually pay off the interest of these loans and will never have any "American Dream". I was homeless too, and another $20000 in fines and recovery fess were added to my dept. In the past 10 years of steady payments, it's almost all gone to interest. I still owe $60,000. I can never pay this off in my lifetime at my age in my 50's.

I've contemplated suicide, I feel that I have no nope and no future and no assurance of any retirement, only work more than one job until I'm dead. I don't care about social security and I have little hope that I'll get it when I'm old enough.

I have nothing here, I have no one and no real reason to even live. I feel that it would be better for me to live a meager peaceful life in a 3rd world country, than to stay here and struggle and drown from now on. I'm not too proud to work for pesos cleaning the homes of other ex-pats or doing their chores. In my case, I wonder "what have I got to lose", and I can't come up with anything at all.




Cryn Johannsen said...

@March 17 4:35 PM - I am very sorry to hear that you have contemplated suicide and that you have struggled financially. You are certainly not alone. I have also struggled financially, particularly after my divorce with my husband. I was also nearly homeless, and it was a battle to survive.

I suggest that if you are able to explore other options outside of the country, and you can come up with a solid plan, then try and see what is out there for yourself - you deserve it. No matter what, don't give up. There are ex-pats that I know who have left, and I know they are thriving.

If you can sit down and devise a realistic plan that is well-researched and based upon rational decisions, then, I think, why not?

Hang in there. We're here to listen.

-Cryn