The Legislature has passed EHB 1823, which would make changes to the Washington student loan program statute. (Gov. Inslee has not yet signed the bill.) I wrote about an earlier version of the bill here.

The student loan program was enacted last year (RCW 28B.93) and the 2022 supplemental operating budget appropriated a total of $150.0 million from the general fund–state (GFS) and the workforce education investment account (WEIA) to the new Washington student loan account (WSLA). However, the statute is merely a sketch of the outlines of a program. It lays out some goals (including that the interest rate be just 1%) and leaves the details to the Washington student achievement council (WSAC). The program has not yet been implemented, and a January report from WSAC to the Legislature raised questions about its sustainability. (I discussed the report here.)

As passed by the Legislature, EHB 1823 would still require WSAC to design the program, but it specifies that the interest rate would be capped at 2.5%, loans could not exceed $20,000 per borrower each year, and loans would have to be repaid within 25 years. Additionally, current statute contemplates awarding loans to students in undergraduate and high-demand graduate programs. Under EHB 1823, undergraduates would no longer be eligible for loans.

WSAC would have to report on the design, sustainability, and implementation plan for the program by Dec. 1, 2023. Under the bill, no loans would be awarded until school year 2025–26.

Unfortunately, the bill would remove the current requirement for an actuarial study of the sustainability of the program design. Instead, the bill would allow WSAC to retain consultants “to provide consultation on the sustainability of the loan program.”

Moreover, the current statute specifies that “Student loans shall not be issued unless the program design recommended in RCW 28B.93.020 is forecasted by an independent actuary to be self-sustaining and the interest rates for the loans issued under the program do not exceed one percent.” (Emphasis added.) EHB 1823 would remove that language entirely and instead note that the loan program should be designed so that the WSLA has “a minimum life cycle of seven years and that loans issued under the program do not exceed 2.5 percent.”

The bill would allow the Legislature to appropriate a total of $40.0 million from the WSLA for the program over its first four years (beginning with the first year in which loans are issued). In the fifth year, the Legislature could appropriate $10.0 million. The bill is silent on what would happen after that. These limits on WSLA appropriations were added by the Senate. It will be interesting to see if the final operating budget transfers the remaining $100 million from the WSLA to fund other programs, or if the money is kept in the WSLA for future student loan use.

The Senate-passed operating budget (passed before the Senate passed EHB 1823) would not implement the student loan program. Instead, it would transfer the $150 million that is in the WSLA to the WEIA. (The money would allow for a shift in funding for the Washington college grant from the GFS to the WEIA, as I outlined here.)

The House-passed operating budget would appropriate $130 million from the WSLA to implement the student loan program (as passed by the House March 2). It would also appropriate $10 million from the WSLA for the behavioral health loan repayment program and another $10 million from the WSLA for the health professional loan repayment and scholarship program fund.