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Student Loan Debt Hearing

MoneyWASHINGTON (CNN) — How does the $1.2 trillion in student loans Americans owe threaten the broader economy?

That question was the focus of a Senate budget hearing in Washington Wednesday.

Lawmakers are concerned the student loan industry is set up to make borrowers fail by imposing high interest rates and payment plans that leave borrowers’ pockets empty and lenders’ bank accounts plush.

Consumer groups say it’s time for an overhaul of the student loan lending system.

“In addition to considering how to make college affordable for future students, we cannot ignore the impact of the $1.2 trillion already owed by more than 40 million Americans,” said Rohit Chopra, student loan ombudsman at the Consumer Financial Protection Bureau.

More than 85 percent of education debt is backed by the federal government.

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