New student debt relief announced, will it help?

RIO GRANDE VALLEY, Texas (ValleyCentral) — President Biden announced the latest in a series of student debt initiatives last week. According to the White House, this plan cancels more than $1 billion in loans for over 150,000 people.

This round of debt relief applies to borrowers enrolled in the Saving on Valuable Education repayment plan. Borrowers must have been repaying their loans for at least 10 years and had borrowed $12,000 or less.

According to Ahmed M. Elnahas, Associate Professor of Finance at UTRGV, the costs for higher education are going up everywhere. “There is like a massive increase in the pricing of education. Like, four-year college degrees. Both for private universities and for public universities," Elnahas said.

Students at UTRGV who have taken out loans said they're optimistic about paying them back. But they do have concerns.

“It’s something that I do think about all the time. But, I’m hoping that I can," said Lori Saldana, a Medical Lab Science Program student.

White House officials said the plan was originally supposed to go into effect in July, but the timetable was moved up. They said nearly 4 million borrowers have gotten relief through more than a dozen executive actions.

“Now, the education is subsidized," Elnahas said, "So, indirectly, we can increase the intensity of the problem in the long run. By incentivizing those institutions to increase their tuition fees. Because, hey, somebody else will pay.”

He added at the same time, education costs have gone up, and prices for other commodities have also increased. He said a single-family home in the U.S. has gone up 130 to 140 percent over the past 60 years.

Elnahas advised students to look at what they're getting for their educational investment. “Career-wise. Starting salary, mid-life salary, benefits, you know, career potential," he said.

Saldana said she thinks she'll be able to earn enough money in her profession to repay whatever student debt she incurs, “I do know that they get paid a good amount of money," Saldana said, adding, "But I do hope to get my Master’s, so that will help. But then you have to pay for that too. So we’ll see, right?”

Elnahas said the key to paying down loans is to prioritize those costs. He said, "One problem that the middle class, a lot of us are facing right now, is that we are adamant on keeping a certain lifestyle. Then, after we’re sure that this is taken care of, we think about what remains goes into savings. What remains goes into paying off our loans. I think it should happen the other way around.”

Student loan holders can sign up for the SAVE program at studentaid.gov/save.