I regard any interest rate above 10% as usury. The higher the rate, the more difficult it is to pay off the principal. College grads are finding out how hard it is to begin an independent life if burdened with a large student loan. With the prime rate at historic lows, large financial institutions are profiting obscenely from loans exceeding 10% and sometimes reaching 30% for those who are delinquent on their payments.
I just renegotiated a credit card debt of about $15,000 reducing the rate from 11.9% to 11.3%, still much too high. The sweetener that made the deal attractive is that now there is no interest until August, 2013. I expect to save about $1,500 which I will use to accelerate payment on the outstanding amount of the debt.
- What are usury laws and how might they affect consumer credit? (cardhub.com)
- Student debt (bell-book-candle.com)
- Student Loan Debtor: “[T]he reality is that I think of killing myself all the time” (alleducationmatters.blogspot.com)
- Student Loans and the American College Downfall (loans.org)