In 2022, the Legislature enacted E2SHB 1736, which creates the Washington student loan program. Many program details were left to be determined later, with recommendations due from the Washington Student Achievement Council by Dec. 1, 2022. (The report has not yet been published.) However, E2SHB 1736 did specify that loans will not be issued unless the program is projected to be self-sustaining and the interest rates do not exceed 1%. Also, no loans will occur before school year 2024–25.

The enacted 2022 supplemental to the 2021–23 budget appropriated $111.0 million from the general fund–state (GFS) and $39.0 million from the workforce education investment account (WEIA) to the Washington student loan account (WSLA). Then, the budget appropriated $150.0 million from the WSLA for implementation of E2SHB 1736—even though no loans may be made until the 2023–25 biennium.

Gov. Inslee’s 2023 supplemental budget proposal would rescind the $150.0 million appropriation from the WSLA to implement E2SHB 1736. Instead, he would provide the $150.0 million in 2023–25.

Additionally, his proposal would use more WEIA funding than originally intended. His 2023 supplemental would transfer $50.0 million from the WSLA to the GFS. Then, his 2023–25 proposal would use the remaining $100.0 million in the WSLA plus $50.0 million from the WEIA to fund implementation of E2SHB 1736. Thus, a total of $89 million from the WEIA would be used for the student loan program. Effectively, this policy would represent a transfer of $50 million from the WEIA to the GFS.

(The WEIA was created in 2019, when the Legislature imposed a business and occupation (B&O) tax surcharge for businesses in certain sectors to supplement funding for higher education.)

(For more on the governor’s budget proposals, see here.)