Moving Abroad with Debt
Debt does not stop at the border. But the rules for how it follows you vary dramatically depending on the type of debt, the country you owe it in, and where you are going.
US federal student loans
Federal student loans follow US citizens everywhere. You still owe them, and the Department of Education will still collect. But there is a legal mechanism that can reduce your payments to zero.
The Foreign Earned Income Exclusion (FEIE) lets Americans abroad exclude up to $130,000 of foreign-earned income from their federal tax return. Income-driven repayment plans like IBR and SAVE calculate your monthly payment based on your adjusted gross income. If you claim the FEIE, your AGI drops accordingly. Someone earning $130,000 abroad could report an AGI near zero, resulting in $0 monthly payments.
This is legal. It requires annual recertification with your loan servicer using your reduced AGI. Interest continues to accrue, and if you return to the US with a higher AGI, payments jump back up. It only works for federal loans. If you refinanced with a private lender, you lost access to income-driven plans entirely.
US credit card and medical debt
Unsecured debt (credit cards, medical bills) still exists when you leave. Creditors cannot easily pursue you across borders, as US court judgments generally are not enforceable in foreign countries. But your US credit score will deteriorate. Unpaid accounts go to collections, charge-offs appear on your report, and if you return, you are starting from a damaged position.
Your US credit history does not transfer to other countries. Each country has its own credit reporting system. Your debts will not follow you into a foreign credit file, but they will be waiting if you come back.
UK student loans (Plans 1, 2, and 5)
The Student Loans Company (SLC) requires repayment from overseas borrowers. Overseas thresholds are set country-by-country based on a Price Level Index that adjusts for local cost of living. You repay 9% of income above your country-specific threshold, converted to GBP.
Plan 5 loans (starting from September 2023 entrants) begin repayment in April 2026 with a UK threshold of GBP 25,000. The SLC can and does pursue overseas borrowers. Plan 2 loans are written off after 30 years.
Australian HECS-HELP
Australia requires repayment based on worldwide income. If you leave Australia for 183+ days, you must submit an overseas travel notification within 7 days and report your global income annually.
The 2025-26 minimum repayment threshold is AUD 67,000. A significant reform: from 2025-26 onwards, compulsory repayments are calculated only on income above the threshold, not on total income once you cross it. Additionally, a one-off 20% reduction to existing HELP debts was applied automatically on June 1, 2025.
Mortgage decisions
If you own property, the decision is keep, rent, or sell. Keeping and renting generates income but creates landlord obligations from abroad (property management, tax filing in the home country, potential capital gains complications). Selling simplifies things but may trigger capital gains tax. Most expats who plan to return within 5 years keep and rent. Those leaving permanently tend to sell.
tl;dr
US federal student loans can legally hit $0/month payments abroad via the FEIE and income-driven repayment. UK student loans follow you with country-specific thresholds. Australian HECS-HELP now taxes only income above AUD 67,000 and cut all existing balances by 20% in 2025. Unsecured US debt cannot easily chase you across borders, but your credit score takes the hit. Moving abroad does not erase debt. It changes the math.