Senate Dealing with $1.2 Trillion in Student Loan Debt

iStock/Thinkstock(WASHINGTON) -- Student loan debt is a huge weight on the U.S. economy.

Capitol Hill lawmakers heard from economists and students Wednesday on how to best deal with the crushing debt that amounts to $1.2 trillion owed by 40 million Americans. That figure surpasses both credit card and auto loans.

Economist Richard Vedder told a Senate committee that "The primary cause of student debt problem is increased university fee," that is, the cost of going to college is far outpacing the rate of inflation.

Vedder went on to say that the costs of tuition, books, room and board has risen so much in recent years that even Depression-era parents had an easier time paying for their children's education.

All this debt is hampering economic growth because many former students are taking a decade or more to pay off their loans, preventing them from saving money, buying homes or starting families.

Brittany Jones, who piled up $60,000 of debt to get a teaching degree, was earning just $10 an hour right out of college. Her student loan payments ate up more than a third of her monthly income.  Jones told the Senate panel, "I worked as many as three jobs at once just to make my monthly payments."

Massachusetts Democratic Senator Elizabeth Warren said one possible solution to lessen the debt load is refinancing "the outstanding student loan debts...down to last year's rates."

Copyright 2014 ABC News Radio

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