Half of all full-time undergraduates in the United States take out federal student loans each year, adding up to about $57 billion per year, according to the College Board.

While many students and their families turn to loans to help finance their college degrees, the entire federal student loan system is under fire by the Obama administration and could be changing.

President Obama says the federal government is wasting money by paying banks to offer student loans, and wants to cut out what he calls the “middlemen” who cost taxpayers billions.
“It turns out that right now a lot of the student loan programs are still run through financial institutions and banks,” Obama said at a recent appearance. “So you got this middleman, and they get billions of dollars per year managing loans that are guaranteed by the federal government.”

Under the proposal, students pursuing a college education would borrow directly from the government. Loans from banks would also be available, but they would not be guaranteed and the interest rate would not be set by the government.

The government says the savings realized by the proposed change could be put towards other financial aid programs instead such as government grants.

Although, the plan passed through the House last year, experts say it will face a tougher fight for approval in the Senate.