There's a huge misconception in the entertainment industry that folks should work for free. Most other fields have very different approaches towards young workers. Aaron Marks discusses the working relationship in his gook The Complete Guide to Game Audio, which I'd recommend you pick up and read. Making it a tangible exchange helps solidify the working relationship. There's more on the line for both the contractor and the client - whereas working for free puts only the contractor at risk. I've also seen (and experienced) the low morale when it comes to working for free early in my own career. It's hard to get inspired and put in the long hours when you know the client is getting it all for free. Trust me. It may not feel like it at first but everyone has a line.
I've seen some developers actually prey out young(er) audio guys to get free work. Once that person starts to build up a resume and some credentials, that developer seeks out the next new face to get more free work. Of course, not every developer is like this. It happens in other fields too - especially film. I cannot tell you how often I've read ads where producers/directors will say they raised X amount of cash to film on a RED camera and got B actor and such but have zero money for audio work. Yet they're going to want Hollywood level quality.
The longer you work in this business, the better you'll get at spotting those projects that don't really have any clue what they're doing. Most often it's those projects where the lead or producer is making huge promises but cannot deliver anything tangible. Working for free only continues to devalue you and your work - as well as the audio industry as a whole. You could certainly charge really cheap rates and explain that it's a special discount while you're establishing yourself.
I've referenced this video plenty of times before but Harlan really lays it out perfectly (warning rough language):
There's also a great skit which outlines the various BS lines that we often hear but I'm having a hard time finding it.