6507-S2

AN ACT Relating to the Washington higher education loan program; adding a new section to chapter 28B.80 RCW; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the rising costs of higher education and the lack of financial assistance for middle-income families has created a crisis of access to the opportunities that higher education provides. This crisis comes at a time when federal support for financial assistance is flagging and demographic trends are placing unprecedented demands on scarce state resources. The legislature finds that the state's ongoing operating resources are limited and that it is prudent to make a one-time investment of state assets to capitalize a self-sustaining loan fund to supplement existing state and federal financial assistance programs to aid middle-income families.

NEW SECTION. Sec. 2. A new section is added to chapter 28B.80 RCW to read as follows:

The higher education coordinating board shall administer the Washington higher education loan program as established by this section.

(1) To the extent that funds are available for this purpose, the higher education loan program shall provide loans for higher education purposes to students who are residents of the state and are attending institutions of higher education located in the state of Washington. Eligibility for the loans shall be limited to those students who are eligible for, but are not receiving, need-based state financial aid grants administered by the higher education coordinating board and whose family income does not exceed one hundred twenty-five percent of the state median family income.

(2) The higher education loan account is created in the custody of the state treasurer. All moneys appropriated by the legislature or received from other sources for the purpose of the higher education loan program shall be deposited in the account. Expenditures from the account may be used only for the purposes of the program and, with the exception of expenses of the state investment board set forth in subsection (3) of this section, may be authorized only by the executive director of the board or the executive director's designee. The account is subject to the allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

(3) The state investment board shall have the full power to invest, reinvest, manage, contract, or sell or exchange investments of moneys in the higher education loan account. In establishing investment policy for the account the state investment board shall recognize the intent to maximize the returns of this account, at a prudent level of risk. All investment and operating costs associated with the investment of the moneys shall be paid pursuant to RCW 43.33A.160 and 43.84.160. With the exception of these expenses, the earnings from the investment of the moneys shall be retained by the higher education loan account.

(4) The higher education coordinating board may make direct loans from the account or may provide loan guarantees to financial institutions or other organizations providing higher education loans to eligible students.

(5) To assist the higher education coordinating board in the administration of the higher education loan program, the designation of participating institutions of higher education, and the establishment of eligibility criteria, loan terms, repayment schedules, and other elements of the loan program, the chair of the board shall appoint an advisory committee pursuant to RCW 28B.80.380. The advisory committee shall include, but not be limited to, representatives of institutions of higher education, students, and financial institutions.

(6) The board may receive gifts, grants, and endowments from public or private sources, in trust or otherwise, for the use or benefit of the higher education loan program.

(7) The higher education coordinating board may contract with public or private organizations for the administration or implementation of the higher education loan program.

(8) By December 1st of each year, the board shall submit to the governor and the higher education and fiscal committees of the legislature a report describing the fiscal status of the higher education loan account, the volume of loans made under the program, and a summary of current loan rates, terms, repayments, and defaults.

NEW SECTION. Sec. 3. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.