Kathryn Miranda said Pell grants and scholarships covered her tuition and fees at New Mexico State University, but she needed to take out a student loan to pay for on-campus housing. She did not like the idea then, and she likes it even less now after she made her first payment.

Miranda, a first-generation college student who lives on a tight budget in Central El Paso, is among the estimated 43.5 million Americans who have accrued about $1.77 trillion in student debt. The government officially restarted student loan repayments this month after it paused them in March 2020 due to the pandemic.

Some college graduates began to make payments in September when the U.S. Department of Education  started to charge interest again on student loans. The U.S. Department of Treasury reported that billions of dollars poured into its general fund starting in late August, and that most of it probably was for the education department. As of mid-September, it had documented $4.5 billion in income. Typically, most of those funds are from student loan payments.

Miranda accumulated $7,000 in student debt before she earned her bachelor’s degree in English from NMSU in 2022. She works as an English tutor at El Paso Community College and as a substitute teacher with the El Paso Independent School District. The educator received an email from the government this summer that advised her to contact her loan servicer to set up a repayment plan. The Department of Education sent out 130 million emails and 8 million texts this summer to borrowers to alert them about the restart of payments as well as tools and resources that could help them.

El Paso Community College said 256, or 1.6% of its non-dual enrollment students, had federal student loans. The college also reported that the Department of Education data showed that as of late September, EPCC’s Cohort Loan Default Rate for fiscal year 2020 was zero. The University of Texas at El Paso did not respond to a question about current numbers of UTEP undergraduates who received federal student loans, but last year, the university reported that 6,812, or about 34% of its undergraduates received federal student loans in the 2020-21 school year. 

“It’s scary,” said Miranda, who secured a low monthly payment with a low interest rate. Her goal is to pay more when possible and get out of debt sooner than later. “I didn’t like the idea of a student loan. My family told me that loans are just part of life like when you buy a car or a house, but you don’t hear people talk about their student loans over lunch. In the last few months, loan repayment has become a reality for me. I have to face it.”

The Department of Education reported that more than 3.8 million Texans owe more than $127 billion in student loans. About 34% of those borrowers owe $10,000 or less, and 79% owe $40,000 or less, according to the Education Data Initiative.

Borrowers can expect their monthly payments to range from $222 to just over $500, according to various education and consumer websites. People who miss a payment during the next 12 months will not be considered delinquent, but interest will still be charged. As of 2021, approximately 3 million people – about 7% of all borrowers – were in student loan default   .

The Biden administration has tried several ways to help borrowers. The U.S. Supreme Court struck down his initial student loan forgiveness plan last June. The justices voted 6-3 that the administration exceeded its authority.

The White House unveiled its Saving on A Valuable Education, or SAVE, plan around the same time as the court’s decision. The program bases monthly payments on the borrowers’ income and family size. Those who make less than $15 an hour will not have to make payments and their debt could be forgiven after a certain period of time. Monthly payments are capped at 5% or 10% of discretionary income, respectively, for undergraduate or graduate loans. The downside for borrowers who select this plan is that its timeline could last 20 to 25 years.

Also, the Biden administration announced Wednesday additional student debt relief of up to $9
billion that could help approximately 125,000 borrowers through fixes to three existing programs including the Public Service Loan Forgiveness plan.

David Marcus, a certified public accountant and managing partner of El Paso-based Marcus, Fairall, Bristol + Co., said he was not an expert in student loan issues, but he encouraged graduates with student debt to investigate different government programs that will help with loan relief. One of those options is the Public Service Loan Forgiveness plan. This program benefits graduates with direct loans from the Department of Education who work full time for a government or nonprofit organization. They will have their loans forgiven after they make 120 monthly payments under an accepted repayment plan.

Marcus gave an example of a person who graduates from medical school and works in an underserved area as someone who could get a lot of their debt forgiven.

“That’s huge if you do it,” Marcus said.

Dr. Daniel Castro, an El Paso native, has started to repay his student loans for medical school. He is an anesthesiology resident who serves at several Dallas area hospitals to include Parkland Memorial. (Photo courtesy of Dr. Daniel Castro)

Dr. Daniel Castro, an El Paso native and first-generation college student, is an anesthesiology resident at UT Southwestern Medical Center in Dallas. He earned his bachelor’s degree in biology from UTEP in 2014 and paid for his education with Pell grants and scholarships.

Castro received his medical degree six years later from McGovern Medical School, which is part of the University of Texas Health Houston. He earned some scholarships from the medical school and outside programs, but it was only about 20% of what he would need. He used loans to pay the rest. His student debt topped off at $164,000.

He refinanced his debt about 18 months ago to consolidate his multiple loans into one payment with a lower interest rate. For now, he will pay $100 a month , but after he completes his residency next year and becomes a board-certified attending physician, he will need to pay the full monthly payment of at least $1,800.  

Castro said he would pay off his debt in 10 years if he follows his plan, but his goal is to settle his account in two years. While the loan was a lot, Castro knows it was the only way he could achieve his dream to become a physician.

“To me it was an investment,” Castro said.

Financial planners have said that some people with student debt request home equity loans to cover their student debt, but Marcus, the CPA, said that would be a bad idea because it moves a government loan to a personal lender that probably has a higher interest rate, and the debt will be treated differently on a credit report.

While some people try to discourage family and friends from student loans for college, Marcus said they might be the only way for individuals to earn the degree or credential that will propel them to a successful life. He lamented how easy it can be to get a student loan because some borrowers do not take it seriously and allow their debt to get out of hand.

“I think the reason that the potential forgiveness of loans keeps coming up is simply because people can’t pay them back,” he said. “They’ve just gotten too expensive.”

Disclosure: David Marcus is a member of the El Paso Matters Board of Directors. Board members are not involved in the editorial content of El Paso Matters. The newsroom’s policy on editorial independence can be found here.

Daniel Perez covers higher education for El Paso Matters, in partnership with Open Campus. He has written on military and higher education issues in El Paso for more than 30 years.