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People in The Netherlands have done this. They go to S/E Asian countries to skip out on a €30,000 debt. After a while your passport becomes invalid which makes travel very difficult. And with the outstanding debt you are not able to get a new passport.

Which is dumb, because you only have to pay off the debt if you are able to, interest rate is very low, you can pause it for a few years and after 35 years the loan is automatically forgiven. It's not a big deal. Completely uprooting your life to skip out on a €50/month payment is insanity but people see that €30,000 number in their portal and freak out about it.

Approximately 25,000 emigrated debtors are currently untraceable by the student debt collector.

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In the US, student loan interest rates and average amount of debt are generally much higher than other countries. And you your student debt is designed to be permanent so that even declaring bankruptcy doesn't discharge it.

Its essentially just a tax you pay for using higher education. You pay that in other countries as well via your taxes. Your tax debt is also permanent so you can't get out of paying taxes just by declaring bankruptcy.

It is a bit weird that they let universities levy indirect taxes but its not really bad. Imagine if instead of property tax you have government property loans and the interest of those loans was instead of property tax, I think that wouldn't be a bad system.

> Passport Blocks: Arrears exceeding €5,000 can result in registration in the passport alert system, making it impossible to receive a new passport,

I would say that is pretty serious violation of human rights, for relatively small infraction. Soviet countries used similar system to prevent people from leaving their communist paradise.

How are you supposed to pay your debt, if you are not allowed to find new job abroad?!

The Dutch embassy will be happy to get you home, where you can find a job.

Right, for tiny fee of 6000 euro return ticket, and 2000 euro monthly rent. Great plan to save money and pay debt!

There's only so much handholding a government is going to do. Don't let your passport expire while abroad and ineligible for renewal.

Speaking of plans... If you haven't made bank already when the passport expires, perhaps it wasn't such a good idea to move abroad after all.

US does same for very small child support debts (I think around $1000) as well as larger tax bills. Of course when I cross to/from Mexico by land at small crossing I've noticed most have no passport and just beg for forgiveness which usually works.

> I've noticed most have no passport and just beg for forgiveness which usually works

in which direction? headed south or back north?

South almost never checks anything whatsoever so it's a moot point there unless you're crossing in a major city like Tijuana. On many occasions even the guy at the metal detector has been sleeping. (Also note: Mexico never changed law like US, in Mexico it's still legal to enter with only a birth certificate and ID)

Going North into america I'd say the majority don't have passports and they are let through anyway. I actually have a legal US passport and I watched myself detained, jailed, and interrogated while everyone without a passport was let through with a birth certificate and state driver's license (this is modern times, not the days when that was all you needed). So maybe it is worse to have a passport as it's suspicious as most people at the lesser land crossings do not.

> that is pretty serious violation of human rights

I don’t think it’s that hyperbolic. But I agree that the existence of debts shouldn’t invalidate one’s right to a passport.

(The counter argument is that passports are a privilege and citizenship a bundle of privileges and duties. Why should the country have the burden of passporting someone abroad who as abandoned it.)

Education is also a privilege. And universities should have no power to block people from leaving a country. It is like Emirates preventing people to go home, because of unpaid speeding tickets. Or Qatar confiscating passports of Indian workers.

> universities should have no power to block people from leaving a country

They don’t.

They do, state owned education

https://www.un.org/en/about-us/universal-declaration-of-huma...

"Everyone has the right to leave any country, including his own, and to return to his country."

Passports shouldn't be a privilege, and violation of the universal declaration of human rights is pretty serious.

> violation of the universal declaration of human rights is pretty serious

No, it isn’t. It isn’t even legally binding. (And obviously couldn’t be. It would invalidate incarceration and conscription, for example.)

People don't have that right when they are criminals, prisoners don't get to leave their country etc and this is essentially that.

They only do this if communication with the debtor is impossible. If this happens to you, you can contact the government, schedule a payment plan for your debt and then they give you a passport with a 12 to 24 month validity.

> They block your passport because they can't reach you

Wouldn’t one applying for a passport involve the government and person connecting on some level?

My best guess is that the embassy in the foreign country gets a red flag when you try to renew your passport and you then have to contact the government debt collector. Different branches of government.

No, they also do that, if you have no money to pay.

I mean, my monthly student loan payments in the US for a degree in healthcare is $1300 USD per month. It comes out to about 40% of each paycheck. That’s a significant amount. I’d honestly consider moving abroad to avoid paying it. It’s debilitating and I can barely survive while making payments.

Wow. For The Netherlands it is 4% of your income, but only the part of your income above minimum wage. If you earn €40k, minimum wage is €26k then you pay 4% over €13k = €520 per year = €43 per month.

The average medical student is around €50,000 to €60,000 in debt.

€50,000 / €43 / 12 is more than 96 years. Is anyone expected to pay their loans off, or in other words how much debt is forgiven each year?

I'd assume that medical graduates are earning a lot more than €40k

In the US, student loan interest rates tend to be close to market (which I find despicable) and there is no automatic forgiveness. In fact, student loan debt has extra rules in the US making it difficult to get discharged in bankruptcy, so even that route doesn't work for a lot of people.

Had to look it up, it is 2.3% for 2026 which is a bit below the Euribor 1 year rate. Between 2017 and 2022 it was 0%.

Loan forgiveness happens after 35 years so for most academics that is about 10 years before retirement. Forgiveness also happens upon death.

Bankruptcy is a bit different here. We have a program where someone manages your finances for about three years, and after that most remaining debt is forgiven. However, student debt is an exception, that one stays

> Forgiveness also happens upon death.

Comforting I'm sure. But it wasn't always that way:

"Six years after the death of Christopher Bryski, a 23-year-old student at Rutgers University, Key Bank has agreed to forgive his student loan. But Bryski's family is not stopping there: It's now fighting to change the laws in the hope of sparing others the trauma it endured as lenders continued to hound it for payment on its dead son's debts."

And it might not be mandatory:

"But it is guidance, not law, and it does not cover creditors collecting their own debts, as they are not covered by the FDCPA (Fair Debt Collection Practices Act)," she said.

https://abcnews.com/Business/bank-forgives-dead-students-loa...

Yeah, I find this deeply frustrating. Interest rates are supposed to reflect the level of risk, and student loans are deeply low-risk to the lender.

> student loans are deeply low-risk to the lender

Based on the other comment, they absolutely reflect that.

I don't think the other comment is accurate.

edit: Yeah, that other comment is talking about European rates, not American rates.

https://studentaid.gov/understand-aid/types/loans/interest-r...

6.39% to 8.94%, and that's for Federal. Private ones tend to be even higher.

  7/1/21–6/30/22  3.73%
  7/1/20–6/30/21  2.75%
  7/1/19–6/30/20  4.53%
  7/1/18–6/30/19  5.05%
  7/1/17–6/30/18  4.45%
  7/1/16–6/30/17  3.76%

Hmm. I wonder why it doesn’t make sense to launch a private lender that offers lower rates.

The Fed rate is too high for the low risk involved.

Private student loans are similarly protected from bankrupcty, and don't have things like income-based repayment; they are, if anything, safer for the lender. https://studentaid.gov/understand-aid/types/loans/federal-vs...

Sure. I’m saying why couldn’t you and I start C & J Lenders Inc. and undercut those guys. Say, 5% for a 20-year loan [1].

[1] https://home.treasury.gov/resource-center/data-chart-center/...

Same reason I can't easily start an AT&T/Verizon competitor.

Doesn't mean their pricing is that reasonable, or that funding education should be run this way in the first place. It just means there are big barriers to entry, often established by the existing players to protect their margins. The Fed rate for student loans should be lower.

> there are big barriers to entry

What are the barriers? Can I make non-dischargeable student loans at 5%?

> What are the barriers?

Lots of startup capital?

The inability to issue fiat currency based on a fraction of my actual holdings?

That is what taking a loan is, you are able to do it, its how you afford your homes etc. The bank is the essential guarantor in that transaction, without the bank the person you buy the home from doesn't trust you enough but the bank has that trust.

So essentially governments build trust with banks so those banks can issue fiat currency. Then those banks build trust with people like you so you can use the bank to issue fiat currency. Its the same system, bank pay interest to central bank for doing that and you pay interest to the bank.

If you mean why you can't get money from the central bank? Its just that you haven't built trust with them. But you can do so indirectly by taking a loan from your local bank, and that trusted middleman takes a fee for it.

Finding investors willing to take less than 5% return (after paying for overhead and uncollectable loans being written off due to death/injury/ability to pay/etc) would probably be the primary one. You would likely be offering more or less the same or worse rate as I could get on a 10 or 30 year federal bond with more risk associated with it.

I know I’d be completely uninterested in such an investment pitch. It would work better as a charity ask for me.

> Finding investors willing to take less than 5% return

If it’s safe I can leverage it.

> get on a 10 or 30 year federal bond with more risk associated with it

5% is 10 bps over the 20 year. Not a lot. But I picked a round number. Point is why couldn’t it be undercut? If it can’t, easily, it’s correctly priced.

> If it’s safe I can leverage it.

Loans to private persons are very unsafe, for example they can move abroad and just stop paying as the article is talking about. Every person doing that raises interest for everyone else.

Risk is only one component. Opportunity cost and the time value of money is another.

Risk premium is on top of the other bits.

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