Ask Headmaster Ken

First off, I'd like to thank the site creators and contributors for making such a valuable and realistic resource for those interested in EFL teaching in China. I am a recent college graduate about to begin my CELTA certification and the information I've garnered from this site has helped me greatly in my considerations for a country in which to teach.

Now on to my question. I am an American with a BA in English and have accrued in my studies an amount of debt that will require me to make payments of around $300 USD (~2050 RMB) per month to my lenders. After reading various blogs, job posts, and the city guides on MKL, it seems that this will be a hefty but not impossible sum to manage from month to month with the pay from EFL. However, I will assume that with the generally precarious nature of Chinese banking that there will be unforeseen difficulties to making these payments across the sea. I was wondering what sort of experiences others have had with repayment of debts to American lenders in terms of ease and nature of transfer, applicable fees, and general feasibility of managing student loans from China.

We have had a few teachers in the past who had recurring payments back home. This was a few years ago, so perhaps the system is better now.

After trying different methods of making payments via bank/wire/etc. they finally resorted to simply sending a bank transfer to a trusted family member who then sent the payment to the lender.

The problem, of course, is that mainland China does not issue personal checking accounts (and even if they did, they would be useless as no company or storekeeper is going to accept what is essentially a personal voucher in lieu of cash money).

Before I moved to China, in an attempt to maintain the few American credit cards I had, I gave a trusted friend of mine power of attorney and also left him with several dozen signed blank checks. I reported a change of address to my friend's home and whenever he received a bill, he would simply fill in one of the blank checks and mail it off for me.

This system didn't prove to be very feasible over time and it was an enormous inconvenience to my friend. After about a year, I closed out all my American credit card accounts and opened a China Great Wall credit card account here.

In order to pay ongoing debts accrued from home, you will need a family member or trusted friend who can write out and mail checks for you. Depending on where you will be teaching, you may be able to simply transfer monies into this person's account or, worst case scenario, you can wire the money via Western Union but the fees in mainland China are relatively high ($50 service fee per $2,000 sent).

If your student loans are government loans, you might be able to take advantage of the economic hardship deferment. This is a deferment available to those with low income and most teaching jobs in China would qualify (mine did anyway). I took this deferment for 3 years (the maximum time you can take it).

With this deferment you are not required to make any payments and no interest accrues. But you can still make payments, you just don't have to make them every month. I saved up money in my Chinese bank account, converted it to U.S. dollars at the end of the year, and just made a large payment when I went back to the States (I keep an American bank account open for convenience when I go back, which is once a year).

Now my economic deferment time is up but I can still apply for forbearance, which also doesn't require you to make any payments but interest accrues. So I'm planning to apply for that and continue to do the same thing I was doing. It takes some discipline to save away that money in the bank every month but it's much easier than finding a way to make a monthly payment from China.

My husband and I have been in China for a little over a year and have a combined monthly student loan payment of $394 or 2649 RMB. Firstly, before we came here we opened a checking account with an international bank (Citibank) and made sure we had enough money in it to cover our loans for 6 months not knowing how quickly or easily we would be able to send money back to the states. We set up our student loans so they would be automatically paid out of our bank account.

Our combined salary here is 9500 RMB per month which we are paid in stacks of cash. We opened a bank account in China with ICBC and deposit the money we don't need to live on. (Our school provides our apartment, internet, electricity, and gas. Our monthly expenditures IN China come to around 1100 RMB for the both of us, this is food, drinking water, consumables, cell phone, bus fare, snacks, an occasional splurge on western food)

With ICBC bank we were able to (with the help of a Chinese friend) change our RMB to USD and then transfer it to our bank in the U.S. The information the bank here needed was our passports, our local Chinese account information, the name, street address, and our U.S bank's BIC or SWIFT code. The one time we transferred our money we send 6,555 USD. I don't remember what the fee to the Chinese bank was to transfer the money, but our U.S bank only charged us $10. Apart from being a paperwork pain in the --- and it taking almost 2 hrs to complete, it wasn't that difficult.

Like I said, we've been here a little over a year. The first time we sent money home was in February, after being here about 6 months. We've actually planned to go send some money home this week and then won't have to do it again until the end of our contract in June 2011.

Hope some of this helps. Cynthia

PS. I forgot to add, with the internet we're able to access all of our accounts online. We regularly check our student loan and bank account balances and when we had them, our credit card balances and were able to make payments online. I would just recommend not waiting until the last minute to do anything, as our internet here is no where near as reliable as it was in the U.S.

If you can, set your reoccurring payments to auto-pay on a certain day of the month so you don't have to worry about getting online to pay them or having someone back home have to send a check.

Also, a trick we learned...we linked our Citibank account to our PayPal and through this we are able to transfer money without fees to my in-laws. In situations where checks need to be written or if we need them to buy and send something that we can't get online, we transfer money from our U.S bank to our PayPal then send the money to father-in-law's PayPal for free. He can then move the money to his bank account and write checks or send things on our behalf. We've only had to do this 3 times since coming here, but we were glad to have the option so as not to put anyone out or owe them a lot of money when we get back.

Hopefully I won't remember anything more. Thanks for reading, Cynthia