Many new teachers are often recently qualified and have the burden of student loans to pay back.
Normally the pay for an entry-level job teaching English is enough for you to live on reasonably well and save a little. But is it enough to pay back your loan?
Loans received normally attract very little or no interest rate but do increase with the inflation rate.
Many teachers who work overseas can either defer or avoid paying their debts, however this is only ever a short-term solution.
Thus before leaving you need to contact your loan company to complete the correct forms in order to either defer payment or be able to keep in touch regarding the loan.
And remember you will not be forgotten if you don’t pay. If you return to your home country after many years overseas you will find them waiting for you.
If you do not file an Australian tax return you do not pay back anything. Thus if you are living overseas you will not need to pay your loan back. Once you return to Australia you will, however.
United Kingdom Loans
In the UK the repayment threshold is about £15,800 which means that if you earn under this you need not pay anything back. If you earn more than this you would need to pay back 9% of anything greater than £15,800.
Bearing in mind that the cost of living is quite low in most countries compared to the UK, the amount you need to pay back depends on where you are working. To take a typical example, suppose you were working in China. A decent average salary for a teacher there is about £6,000 per annum (which is enough to live on quite well) while the current loan repayment threshold for China is about £9,500 which is well above what you will be earning. This means that you would not need to pay back anything. Of course if your salary went above £9,500 you would begin to pay back. If, for example, you started earning £10,500 in China (which would allow you to live a very luxurious lifestyle) then you would need to pay back 9% of the difference between the threshold and what you earn, i.e. 9% of 1,000 = £90.
The only way to avoid paying the loan is to die or become incapable of work or to wait 30 years when the loan will be written off.
To see the current thresholds for working in various countries, search our site for more details and information on this topic.
United States Loans
If you have an Income Based Repayment loan you will pay back your loan depending on your income. This applies to some Federal loans only. This repayment is about 10% of your income; for teachers overseas any remaining loan is written off after 25 years.
You cannot avoid paying your loan even by declaring bankruptcy, however you may be able to defer repayment depending on the type of loan you have.
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