EPIK, korea, travel

Paying Off Student Loans in Korea: A Very Practical Guide

Yesterday, I finished paying off my loans by teaching English in South Korea. In lieu of going to the nearest convenience store and drinking as much soju as my body can hold, here’s a very practical guide about how you can do the same.


 

A lot of people come to teach English in Korea fresh out of university, and it’s not hard to see why. Teaching English in South Korea can be highly lucrative, and low cost of living offers a high potential to save a lot of money – and put that money straight to your student debt, before the interest can add up too much. In fewer than three years teaching English in Korea, I managed to pay off my entire student loan debt – an amount totaling around $21,500, not including interest – while still managing to travel pretty extensively to places ranging from Kuala Lumpur to Kyoto.

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Wandering through Ipoh, Malaysia. There are worse jobs out there.

Working for EPIK is one of the most popular ways to teach English in South Korea (for other ways to teach English in Korea, click here.) If you’re a new teacher, with only a bachelor’s degree and a TEFL certificate, you’ll earn 2.1 million each month, on average (if you’re interested, the EPIK pay scale can be found here.) This may not seem like a lot at first, but when you factor in the fact that public school jobs in Korea (and most non-public school jobs) will give you a free apartment to live in, it gets a lot sweeter. Rent is what normally eats up most people’s paychecks, and if you teach English in Korea, you won’t have to worry about that for your entire time living here.

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My living room at my first apartment. I made the pillowcases on the couch using an old sweater, and a friend painted the small vanity under the window.

Simply not paying rent can be a huge factor in paying off your student loans. However, let’s break down the rest of your paycheck to see how far that 2.1 million won can really stretch – and how much you can feasibly put towards your student loans every month.

Note: It’s entirely likely that English teachers who come to Korea will end up making more than this amount, even as new teachers. Bonuses such as the “Rural Allowance” (an extra sweet 150,000 each month) and the multi-school allowance (100,000 KRW each month for one additional school, and 150,000 KRW for three or more schools) can really add up over the course of the year or more. Right now, I’m just seeking to address a baseline, raw estimate of potential earnings.

 

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Photo by Skitterphoto on Pexels.com

 

Necessary Expenses

Utilities

Utilities (including internet, phone, and water) are most likely the biggest expense English teachers in Korea have every month. They tend to run anywhere between 70,000 – 200,000 KRW a month. Assuming you’re in the middle of these, that’s about 135,000 KRW per month.

Tax, Pension, and Healthcare

Income tax accounts for 3.3% of an English teacher’s paycheck, which is approximately 69,300 KRW each month. There’s also a pension (4.5% of your total paycheck), which equals 94,500 KRW. On top of that, healthcare is about 1.5% of a teacher’s income, which is 31,000 KRW. In total, around 194,000 KRW comes directly out of teacher’s paychecks. 

Food

Food in Korea ranges from the cheap kimbap to extravagant dining-out. If you cook a lot at home, expect to spend around 160,000 KRW or so a month for dinners and breakfasts. I eat lunch at school (which you can learn more about here), which only runs me about 3,000 KRW per meal, for a grand food total of 220,000.

Of course, this number can fluctuate wildly depending on each individual’s tastes. Western food tends to cost a lot more than local Korean food, so budget accordingly. To be more generous, we’ll assume you spend 300,000 KRW per week on food.

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One of Korea’s most famous dishes: Stone Bowl Bibimbap (돌솥 비빔밥). I’m pretty sure this bowl cost me 7,000 won – and of course it came with plenty of side dishes (반찬).

 

So, after those necessary items, roughly 1,300,000 KRW remains. That’s almost $1,150 a month that can go straight to student loans if you’re super frugal, for a grand total of around $14,000 off your student loans in the course of just one year!

Of course, most people don’t live off of the bare minimum – especially when they’ve just moved to a new, exciting foreign country. There are a few more expenses to take into account if you don’t plan on going straight from school to your rent-free apartment every day.

 

Other Expenses

Transportation

The apartment provided by your school (should you accept it instead of the 400,000 KRW housing allowance) should be within a reasonable distance to the school, especially if it’s in a larger city. This means that transport has the chance to be completely free for the year! If you have to take the bus or subway, it will only cost about 1, 250 – 2,000 KRW each way.

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I actually got this bike for free – it was left by another teacher when she left Korea. And just look at how scenic my ride was during the springtime!

Other activities around Korea

Of course, Korea has a lot more to offer to the recent college graduate than simply the ability to quickly pay off your student loans. You might want to go to the gym (50,000 – 200,000 KRW/ month), travel around Korea  (Intercity buses around Korea range from about 8,000 – 25,000 KRW), or even hit the local nightlife. Fortunately, as Korea’s infamous liquor soju only costs around 1,000 KRW, this can easily be done on the cheap.

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Jeonju’s Hanok Village – the perfect place to soak in some culture on weekends.

In Total

Even if you live semi-extravagantly go out to restaurants or travel around Korea on weekends and breaks, you can still expect to save around one million won per month. If you’re somewhere in the middle of frugal and extravagant,  you’ll probably save just around a million won each month. In total, that’s around 10,560 USD that can go straight towards your loans during the course of the year. Not bad, especially straight out of college.

As if this weren’t a large enough sum, teachers get the pension paid into each month back at the end of your contract. Best of all, it’s matched by employers for a lump sum of around 2,268,000 KRW at the end of the year. Combined with the contract completion bonus (which is roughly one months’ pay), English teachers can expect walk away from Korea with roughly 4,400,000 KRW (4,078 USD) additional cash at the end of the year. That’s almost $14,600 in total savings that you can put straight to your student loans!

Note: there’s also an exit allowance, but as that will most likely be used to purchase a plane ticket home or to your next destination, I won’t count it here.

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Not exactly suffering here while doubling down on the loans.

Transferring Money Back Home

Unfortunately, to pay student loans in the US, one must use a US bank account. (Tip: set up Direct Debit on your student loan account to bill you every month. That way, you won’t have to worry about making payments and you’ll get a reduced interest rate every month. For more information about repaying your student loans, click here.) As teachers in Korea are paid in Korean won to Korean bank accounts, this can be a bit of a struggle. Transferring money from a Korean bank to an American bank can cost up to $40 – each time you want to transfer money. If you don’t feel like shelling out your hard-earned cash this way, here are some additional options to transfer home for cheap or free.

  • CitiBank
    • If you’re from the US, you’re in luck! You can use CitiBank’s global transfer service to transfer money from a Korean CitiBank Account to your US one for free. All you need to do is open a CitiBank account in the US (which you can do completely online) and one in Korea. If you have the bank workers install the Korean CitiBank app on your phone, you can do all of your transfers to your home account from your phone.

 

  • PayPal
    • PayPal works a bit like CitiBank in that most people just pay money to their Korean PayPal accounts and then transfer it to their home accounts. Personally, I think this is a little more hassle because then you still have to put it into an actual US bank account to use direct deposit, but it’s a still a great option, especially for non-Americans who can’t use CitiBank.

 

  • Cryptocurrency
    • If you’re tech-savvy, consider buying cryptocurrencies like Bitcoin to change your hard-earned won into dollars. If you’re especially smart, you can even play the market a bit and stretch your money further!

Teaching English in Korea can be an excellent way to pay off your student debt – or at least, take out a huge chunk of it during the course of one year. Even if you don’t have any debt, there are still a lot of reasons to come to Korea. The Land of the Morning Calm is waiting to welcome you.

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Maybe you’ll even end up in Jeju if you’re really lucky.

 

7 thoughts on “Paying Off Student Loans in Korea: A Very Practical Guide”

  1. This is a really informative post, thank you! This was my dream when I was younger but it never got actualized. I did get to visit Korea last year though and it was a dream. Planning to go back again next year. Though I’d love to live there for a few years one day ❤

    Liked by 1 person

  2. This was really helpful. I use Bank of America but was looking to open another account without any global transfer fees. I’ll be leaving for South Korea in two weeks. I will be teaching in the rural province of Jeonnam and so far, I have had no luck in finding out if there is a Citi Bank in the area. The Korean Citi Bank website shows no branches in the area, so I guess I will have to use the paypal option. Thanks for this!

    Liked by 1 person

    1. There’s a CitiBank in Gwangju, which is where I opened my account. I got permission to leave work early one day so I could go when it was still open, as it was roughly an hour away from me at the time.

      You’ll need to bring your phone when you open your account in Korea, as well as the information for you CitiBank account in the US or where ever you live. If I recall correctly, I had to do my first transfer at the bank, but could do all subsequent transfers from my phone. (They’ll set up the app on your phone for you.)

      Liked by 1 person

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