The historically large 2022 supplemental operating budget included $150.0 million in seed money for a new, low-interest student loan program. The program was established by E2SHB 1736 (also enacted in 2022), but the bill left the details to be worked out by the Washington Student Achievement Council (WSAC).

In early 2023, a WSAC report raised questions about the sustainability of the program. The Legislature in 2023 adopted EHB 1823, which shifted the first year of loans from SY 2024–25 to SY 2025–26, increased the target interest rate, narrowed the target population eligible for loans, and removed a requirement for an actuarial analysis. It still left the details to WSAC and required WSAC to report “on the design, sustainability, and implementation plan for the program” by Dec. 1, 2023.

The WSAC report required by EHB 1823 was provided to the Legislature this February. It states that WSAC

is currently finalizing contracts with multiple consultants to design the loan program. No administrative costs have been incurred yet, but formal design work is expected to begin in spring 2024. WSAC remains on track to begin issuing student loans from the Washington student loan account in the 2025–26 academic year.

Meanwhile, the Legislature has reduced the funding available for the program. The following shows how the Legislature has changed the funding in each year.

In 2022:

• $111.0 million from the general fund–state (GFS) and $39.0 million from the workforce education investment account (WEIA) was appropriated to the new Washington student loan account (WSLA) to implement E2SHB 1736 in 2021–23.

In 2023:

• The $150.0 million for implementation of E2SHB 1736 was reduced to zero for 2021–23.
• $90.0 million from the WSLA was appropriated for implementation of EHB 1823 in 2023–25 (and another $1.5 million was appropriated from the WEIA for this purpose).
• $20.0 million from the WSLA was appropriated for two health professional loan repayment accounts for 2023–25.
• $40.0 million was transferred from the WSLA to the GFS in FY 2024.

In 2024 (as passed by the Legislature):

• The WSLA appropriation to implement EHB 1823 in 2023–25 is reduced to $80.0 million.
• $10.0 million is transferred from the WSLA to the GFS for FY 2025.

As a result of these changes, funding to implement the student loan program is now down to $81.5 million. Of that, $40.5 million originated in the WEIA and $61.0 million originated in the GFS.

The original 2024 supplemental operating budget proposal from the Senate Ways and Means Chair would have reduced the WSLA appropriation to implement EHB 1823 to $50.0 million and would have transferred $40.0 million from the WSLA to the education legacy trust account. (The original House proposal would not have made any changes to WSLA appropriations or transferred any additional funds.)

Effectively, the original Senate proposal would have limited the funds in the account to the amount that is statutorily allowed to be spent on the program over the first five years. (RCW 28B.93.060 specifies that no more than a total of $40.0 million may be appropriated from the WSLA during its first four fiscal years and no more than $10.0 million may be appropriated in the fifth year.)

Nevertheless, the Office of Financial Management told the Legislature that it was concerned with the Senate budget’s transfer of $40.0 million out of the WSLA: “The funds are needed in the Student Loan Account starting in the 2025–26 academic school year.” It will be interesting to see if Gov. Inslee vetoes the $10.0 million transfer from the WSLA to the GFS that is included in the budget passed by the Legislature.