The fact that the problem is so widespread means that most young TEFL teachers will have some kind of student loan debt hanging over them for the forseeable future. However, if anything positive can be taken from this it is that student loan debt is so common as to be almost universal! Therefore it is completely normal to teach overseas even if you are nowhere near close to paying back your student loan in your home country.
As might be expected, different rules apply according to which nationality you are and the specific time period when you went to university and originally took out the student loan. In the UK, when you head overseas, you need to contact the Student Loans Company to let them know where you are going and your monthly salary. Failing to make contact with them for a period of twelve months could mean that you have to pay a hefty fine or have emergency sums taken out of your bank account (if they have your UK bank details).
Obviously, the last thing you want to worry about when you are out exploring the world is the possibility of bailiffs knocking on the front door of your parents’ home. Therefore it is vital that you keep in regular contact with the Student Loans Company.
Whereas if you were working in the UK you would have your student loan repayment taken out automatically from your monthly wage packet (via PAYE), you are responsible for notifying the Student Loans Company exactly how much you are earning and then making the necessary payments via the SLC Repayment website.
The repayment will depend to a large degree on the country that you are teaching in and the SLC’s idea of what typical living expenses might be. That is to say that in most countries the threshold for repayment will be set much lower than it would be if you were working in the UK. Many popular TEFL destinations are relatively poor countries with low living costs so this is most unfortunate.
Countries like Hong Kong and Japan are likely to be better in this respect because the cost of living – especially in terms of accommodation prices – are much higher and therefore the student loans repayment threshold will be set accordingly in order to reflect this. But, then again, your wages in these countries are likely to be considerably more substantial than in a poorer country such as Cambodia. So there is much to consider.
One very unfair point about these nation-based repayment figures is that they simply do not take into account the cost of living in different areas of the same country. Think of Indonesia, a huge country that takes seven hours to fly across from west to east. The living costs in the capital city, Jakarta, are far, far higher than smaller towns scattered across the archipelago. The cost of living in the capital city can be three times as high when you take into account transport across the city and accommodation prices. There are similar stories throughout the world and SLC’s crude mechanism does not reflect this important fact. TEFL teachers from the UK start paying back at the same threshold regardless of their specific location within any given nation.
Americans may be able to defer their student loans repayment for a specific period such as one or two years. If this is not possible, it could well be the case that you can reduce the amount that you are paying for twelve months. This would certainly ease the burden somewhat. None of this should affect your credit rating and, because so many people are in a similar situation, it really isn’t something to get too worried about. It’s become normal.
If you want to pay off your student loan debt as soon as possible then positions in the Middle East, Brunei, Hong Kong and Japan are the ones to focus on. However, do bear in mind that given the high salaries in these countries there is quite a lot of competition for these jobs so it is unlikely you will be successful in your application without at least two years of teaching experience behind you.
Whatever you decide to do regarding your student loan repayment, it is really important to not let it get in the way of the adventure of a lifetime. You will almost certainly have plenty of opportunity to pay the loan back later and, especially if you are young, now is the time to see the world and its many peoples and cultures, before you have even more responsibilities such as mortgage repayments. Fear not – most of your teaching colleagues will be in exactly the same position.