Students and employers who need help to pay for education will benefit from higher interest rates, according to Navient, the nation’s largest student loan company.
In a report released Tuesday, the company said that the interest rate it offers on its loans rose from 5.1 percent to 5.7 percent in the fourth quarter of 2018.
The company said it expects the interest rates to rise to 6.3 percent in 2019, 7.2 percent in 2020 and 7.9 percent in 2021.
Navient’s latest figures come as Congress debates whether to extend tax breaks for college students.
The tax breaks, known as 529s, allow students to save up to $5,500 for their education and are worth up to 70 percent of the federal tax bill.
The amount of tax breaks varies from state to state.
The current tax break for those under age 30 is $2,000.
“We continue to see more interest on the loans,” said John Moseley, the president of Navient Student Loans.
“The higher rates help cover the cost of higher education.
This is something that should be available to every American.”
The higher interest rate is expected to encourage many Americans to borrow money for college.
According to the Department of Labor, more than half of Americans with a bachelor’s degree or higher had debt in the first quarter of 2019.
The majority of students who borrow money to attend college are in their late 20s and early 30s.