That's 29% interest. Who out there is actually offering student loans at 29% interest?
The interest rates any bank advertises always have asterisks next to them. The 3% or 5% you see marketed is only for people making certain incomes, with perfect (800+) credit scores, etc.
Someone with lower credit (~600 or under) easily gets a "penalty" of >10%. When they apply, they don't get 3% for a loan, they get 12-15%. Yes, they get sometimes maybe 20% interest. And what are they going to do about it? They have low credit, and no one will do better. Hell, finding the bank that even gives them the 20% loan is amazing. Most people with low credit scores don't have any ability to get credit; everywhere they go, they are told they are losers because their credit score is low and no one helps them. This is why pay day loans have become a thing: banks have stopped serving an entire portion of the population that still needs loans for emergencies (the heater goes out, etc.) just like the rest of us. Except because of credit scores -- which are calculated by a proprietary formula we're not allowed to know, and are crazy hard and expensive to appeal even when the company makes a mistake -- they have to pay higher rates than the rest of us, contributing to a further debt spiral. It's really obscene and needs to end yesterday, but many elected officials such as Debbie Wasserman-Shultz prop up the industry and profit from it.
Keep in mind that low credit DOES NOT necessarily mean someone made mistakes or defaulted on debt. If you are a young then your score relies heavily on your parents, and while the young person may have done nothing wrong personally, they immediately start life with a lower credit score because of the parents' mistakes. Even if both the child and parents did all the right things, there may still trouble for them: the exact formula is proprietary and secret, but we know that things such as yearly income and how often you change jobs impact your score. In fact, NOT taking out debt and paying everything cash actually HURTS your score! If you are a waiter without debt, you still will have low credit simply because you don't make enough money. Likely because banks don't like you if you don't usually take out debt or have lots of free money to take out the debt; the credit score is NOT a measure of how trustworthy you are, but rather a measure of how likely the bank will profit off of you. Credit scores should not be used to judge people for rental properties (becoming more common) or jobs, and probably not even most loans honestly. It's a false measure.
Also, the key word is compounding interest. The on-paper rate might be 15-20% or even lower, but since the interest is then added to the balance when calculating the next interest payment, you're paying interest on interest, making the effective rate numbers like 30% or higher. So even if you pay all of your minimums, the interest can still go up! To my knowledge, there are laws protecting mortgages from this sort of behavior (and other things like balloon payments...), but student loans do not have those legal protections. (In fact, student loans are the only type of loan you can't discharge in bankruptcy. Some jerk that bought a half million dollar house he couldn't afford can get that discharged, but someone with $50k in student debt can't.) My wife had a private loan that compounded daily. This wasn't from a loan shark either but a major bank, and she and her family had excellent credit. When she made a payment, the next day she already had interest rack up, and it was compounding. She was not told that up front. No other loan does that! Not a mortgage or anything. Again, it's a disgusting industry of middle men bankers taking advantage of people with the least money and least options.
tl;dr: compounding interest means the real rate is much higher than what is advertised, and poorer people (ITT's clientelle) tend to get terrible interest rates to begin with. It's a predatory banking system that keeps the poorest of our nation that are trying to do the right thing (trying to go to school and better themselves and get better jobs, as everyone always tells them they should) in debt, so that banking executives make multi-million dollar bonuses. It's time we question bankers, and the politicians that enable and support this behavior, not the poor people they prey on.