Every decision we make has consequences, but not all consequences are created equal. If you receive a parking ticket well away from your home state, for instance, you can probably rest easy knowing that the police will never cross state lines to knock on your door and force you to pay it. One of the most nefarious aspects of student loan debt, however, is that it cannot be shrugged off lightly: unlike other debts, it cannot be discharged by bankruptcy, nor can unpaid student loans be shrugged off at the cost of your credit score. Even so, young adults who have massive amounts of student debt have found a new solution: run so far away that their debt cannot find them.
These so-called “debt dodgers” harken back to their namesake, the 40,000-odd Americans who fled the country to avoid the Vietnam War’s draft. Unlike the average American, who has a “mere” $28,000 in student loan debt, those who have chosen a life on the lamb may have staggering student loan debts that may never be repaid in full. While there are obviously no official statistics on the number of young adults who have chosen to flee rather than pay up, debt dodgers can be found in major cities through Europe, Canada, and Australia, where it’s easy to find work and difficult for collections agencies to find them.
The reason why debt dodging is popular is in part due to this tremendous difficulty in tracking down a person on the other side of the world. So long as individuals stay outside the United States and do not work for an American company in another country, they cannot be held accountable (at least not in the financial sense) for their debts. Finding a permanent job overseas can be difficult, though an American passport rarely hurts your hiring chances, and many debt-dodgers have to take under-the-table jobs. Even so, this represents a better opportunity for financial stability than the bills they’ve left behind, not to mention a higher quality of life than one in which serious anxiety sets in with every phone call.
Not all leave the country to totally escape from student loan debt. In fact, some believe that running away will give them a better chance to repay it down the line. Many employers in the United States pull financial histories before choosing whether to hire a candidate, and unpaid student loans can be a major red flag for a company considering which candidate to invest in. This makes it difficult to get even an entry-level job, perpetuating a brutal cycle where an individual finds they owe more money each day with fewer options to pay it back. What’s more, many European nations have laws against making hiring decisions based on personal finance histories, or have other amenities (such as a lower cost of living) which make it possible to amass the rainy-day funds needed to pay down debt.
Since the student loan crisis is relatively young, it’s too early to say whether or not the debt-dodging strategy will pay off in the long run. It certainly won’t if a family member is a co-signer for a student loan: they immediately inherit the burden of the crippling debt as soon as the primary borrower skips town. However, student loan officers admit that there is a major blind spot with their collection processes for those who did not co-sign their loans and are brave enough to stay in another country for the rest of their lives. While the debt never goes away and the person in question will be denied the ability to collect social security, a debt dodger can theoretically put off the inevitable forever if they decide not to return to the country. The federal government has few tools to collect debts overseas (unlike their ability to stop overseas tax evasion) and debt collectors have no jurisdiction outside the country, making it possible to live abroad and leave your debts to stack up until the end of time.
Those who have chosen this route face many difficulties even if they no longer have to concern themselves with phone calls and overdue statements. First and foremost is the risk of collectors coming after family members (whether family members co-signed the loan or not) and simply transferring the pressure and harassment from one person’s shoulders to another. Another is the fact that they may not be able to see their family and friends when and if they return to the United States, since the IRS pursues domestic debt-dodging aggressively. Finally, there’s the risk of defaulting and losing out on the chance of future forgiveness programs. Hopes that the Obama administration might issue policies forgiving or even negating student loan debt never got off the ground, but future decisions on the student loan crisis may provide some sort of forgiveness, putting dodgers at risk of missing out on another way out of their crisis.
Debt dodging will never be a permanent solution to outstanding student loans unless a dodger takes their choice all the way to the extreme and becomes an expat, never to return to their bills and obligations. Even then, loan collectors never take “no” for an answer and will look for any way to collect payment. For those who choose to run away from their student loan debt, they may find they’re running away from far more than their responsibility, and that they may never be able to come back once they’ve made the decision.