Going to college for many students these days include taking out massive student loans. Sen. Elizabeth Warren, D-MA, introduced a bill this week to ease that burden after graduation.
Many students taking out loans just see the free money coming in without realizing how difficult it can be to repay it. On average, students end up owing about $24,000 after their undergraduate degree. That has increased by 30 percent since 2007.
"My third and fourth year will have a lot more accruing interest than my first two years," second-year medical student Malorie Howe said.
Howe estimates she will have $250,000 in debt when she's finished. That number is discouraging to many prospective students, and not just medical students.
"We're finding that this movement toward getting everybody with loans and saddling them with loans is really getting in the way of students being able to do what they want to do," Rockhurst University economics professor Michael Tansey said.
Warren's bill would lower interest rates to less than 1 percent, a rate she says banks currently use to borrow money from the Federal Reserve. Interest rates average 3.4 percent right now, and are expected to jump to 6.8 percent in July.
Tansey supports Warren's bill, which he says is needed. He also said that banks don't really set loan standards because the federal government backs the loans.
"Why have the middle man if they're not doing a due diligence job of looking at who they're loaning money to?" Tansey said is the question the federal government is now asking.
Student loans have recently topped $1 trillion and economists are worried those debts could topple the economy just like the mortgage crisis did in 2008.
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