Teaching abroad with a Student Loan: China

Wherever in the world you studied, paying back your student loan just always gives you that niggling feeling in the back of your mind. Is it possible to pay off your student loan while teaching in China?

You may think moving abroad to work is a pipedream because you need to get a job in your home country that pays X amount because it’s the sensible thing to do… says who?! Why not take advantage of having your qualifications and the potential to make more money abroad?!

How to pay my student loans while I’m abroad?

With student loan debt surpassing $30,000 on average per student in the US, and £20,000 in the UK, you need to come to the realization that you’re probably not going to pay off your loan until you’re old and grey. Most people tend to make minimum payments, and only after they start earning a certain amount, so will it matter if you try to pay it all off as soon as possible?! Why bother?!

Think of a student loan as any other loan people tend to get in life: a mortgage, a car finance plan, or even bills that you have to pay. Think of a repayment strategy that will work for you no matter where you are. Here are some suggestions to help you make that plan:

  • Teach in China, where you’re bound to earn more money than you expect

Depending on where you work and which type of institute you teach in, it depends on how much you’ll earn. However, you’re not likely to spend half as much as you would in your home country on your outgoings and everyday spending. Food is significantly cheaper, public transport is reasonable, and your salary can range anywhere from £1500 - $4000 USD per month. This will most likely leave you with 50 – 60% leftover per month from your salary (of course, it all depends on your spending habits!). Many organizations or schools in China will pay, or contribute, towards your accommodation, so that’s another cost you don’t have to worry about!

  • Defer your loan while you work abroad

This means setting your loan aside and not contributing towards it until an agreed amount of time with your lender. This can be useful if you are unsure of how you’ll pay for it whilst abroad. However, interest may be added, increasing the amount of money you need to repay, so just make sure you’re clear on the terms and accept the conditions before making that decision. Alternatively, you could pay the interest (which is likely to be minimal compared to the loan repayments) while you’re away to stop the amount seeming more upon your return.

How to ease the burden of paying loans?

You prepare to start a new job in your own country, so why not prepare tenfold for your new job and life abroad? Set out an action plan so the stress of repayments doesn’t play on your mind.

  • Make sure all your documentation is correct

When moving to China, you’ll need a visa and a medical check. You’ll also need a confirmation of employment to obtain both, so make sure you’ve found a legitimate job with a reputable school or company before you go away. This way, you won’t have to worry about when your first paycheck is coming, because you’ll already know (from your contract!)

  • Make sure you’ve read (and reread) your contract

As mentioned, this is crucial. Make sure you’ve gone over every detail with a fine toothcomb, so you know what you’ll have to fork out for, be paid back for, and have subsidized. For example, is your housing paid every month? Do you have to pay for your own flights? Will you get reimbursed? Do you know the average cost of bills you’ll have to pay per month? If it’s not in your contract, dig a little deeper and ask the company directly, so you can have an understanding of what your financial situation will be in your first few weeks or months in your new home.

  • Find a supplementary income

You may have trawled the net and done tons of research about the cost of living, but realistically you won’t fully know until you get there. So, why not have a backup plan and find a side hustle? Whether it’s teaching online or writing or editing teaching materials, find something that you can do in your spare time to make a bit of pocket money. That can then go towards your loans or your interest repayments.

  • Set yourself a budget

Again, this may be hard to do before you actually get there, but after a week or so of being in China, work out how much you think you’ll need to live comfortably per month and set aside a portion of your earnings for your student loan payments. It will help you stick to the payment dates and amounts, and you may even end up paying off more than you expect.

  • Think about ways to send money home

There are many ways to do this, such as through Paypal, Alipay or through your bank.

  • Going through the bank is probably the slowest option, as many bank clerks may not be used to processing international transfers. You’ll need your passport details, the recipient's full name, country and address, the name and address of their bank, and their IBAN and SWIFT codes. However, the maximum amount non-Chinese citizens can send is $500 USD per day, plus a hefty charge, which takes 1 – 5 working days to arrive.
  • Alipay is the most convenient and cost-effective way to send money, as you can send relatively large amounts of money for a small fee. Until recently, only Chinese nationals were able to use this service, but in 2019 the company announced it will start working with foreign bank accounts as well. Ask a newly found Chinese friend or colleague for help.
  • With Paypal, you can transfer up to $10,000 USD at once. You’ll need to create an account with your Chinese card and your home country’s card, then link them to the service. The fees range from 0.5% - 7.4%, so it can be quite costly. However, it is relatively quick, and you’ll likely have used this platform before, making it a trustworthy and safe option.

Opening a Chinese bank account

In some circumstances, your company or school will open a bank account for you. However, if you’re required to open one yourself, you’ll need to know what banks to consider.

  • Bank of China
  • ICBC
  • Agricultural Bank of China

These are three of the most common, and some of these even may have a branch or two in your home country - for example, London has all three.

You’ll need a minimum of 100 USD to open your account, as well as a passport, visa or residence permit. It’s essential to remember to give your bank details to your school once you’re set up, so they know where to pay you.

When you first arrive, you’ll be able to use your home bank card in any of the ATM’s and your credit cards in most of the big stores. However, you’ll most likely be charged from both ends, so try to set up a local account as soon as possible to get your Chinese bank account and set up WeChat Pay or AliPay which are acceptable everywhere. 84% of Chinese said they are prepared for the cashless society :)

Chinese currency and changing money in China

The money used in China is called Renminbi (RMB), or yuan, and they have note values of 1, 2, 5, 10, 20, 50 and 100. Currently, $1 USD is equivalent to roughly 7 RMB.

Be careful of taking large sums of your home currency to China to change. While USD or EUR are acceptable by every bank, it might be difficult to find a reputable place to change other local currencies. Probably, the best option would be to take your bank card to withdraw RMB.

How much money can I save while working as a teacher in China?

As mentioned previously, there can be a wide range of salaries available in China, and of course the less you spend, the more you’ll save.

However, it’s possible to save anywhere between $8000 - $15000 USD over the course of a year if working in a major city.

Most of the time, you can save even more while working in smaller tier 2 or tier 3 cities, cause the cost of living there would be much lower compared to Shanghai, Beijing, etc.

It is worth noting that your salary usually increases depending on your experience, so the longer you stay, the more you’re likely to earn, and the more money you’re likely to save over time.

There are many opportunities for earning and living well in China. It’s worth putting in the time and effort to find an organization that suits you and benefits both you and your financial situation before you go there. Remember though, you are there for the experience as well as the money, so don’t stress, worry or lose sleep over the $100 you couldn’t negotiate, or the job advert you’ve just seen for a higher paying job down the road. If you’re happy with what you’ve accepted, focus on what’s in front of you – making money to save for your future (or pay off your past!) and making memories to last a lifetime.

Everyone has different spending habits and lifestyles, but there are some general tips to save money in China which are easy to follow:

  • Live like a local

Eat as the locals do, and shops as the locals do. Try to avoid pricey Western-style restaurants or expensive Western supermarket food. It’s all about the experience, after all!

  • Choose the right company

Choose an organization that pays for the majority of your monthly expenditures. There’re plenty of companies out there, so make sure you put enough time in searching for the right one.

  • Don’t settle for a low salary

It’s normal to negotiate a salary you think sounds low. A first-time English teacher with little or no experience should expect a salary of around $1000 USD per month, however, aim to push this to at least $1500 per month. It will help you save and live comfortably. You don’t know unless you ask!

  • Work overtime, or offer tutoring

Most Chinese companies will offer extra pay for working overtime, so make sure you keep track of these and submit them at least once a month. Then, offer tutoring services to students who might need extra help, or find a local tutoring agency in your area. Just be careful to not take business away from your actual job.

  • Invest your money

A riskier option than some may be willing to take, but why let your money just sit in an account? Invest in a mutual fund back home, or a high-interest account, or even the stock market in your home country. Try to think of ways to help your money grow on its own. Of course, there are risks to these options, so make sure you’ve thoroughly researched first, or spoken to a financial advisor.