In 2022, the Legislature created the Washington Student Loan Program (program). The Washington Student Achievement Council (WSAC) administers the program and consulted with the Office of the State Treasurer and the State Investment Board on the program design and implementation plan.

In January 2023, WSAC reported to the Governor and Legislature on the program's design, sustainability, and implementation. That report made policy recommendations to define self-sustainability as a target life cycle of the fund for five to ten years.

WSAC was required to contract with an independent actuary to conduct an analysis on the sustainability of the program design, including the ability of the program to operate as self-sustaining if issuing 1 percent interest rate loans. If the independent actuary determined the program design was not self-sustaining with a 1 percent interest rate, student loans were not authorized to be issued under the program. 

Eligibility for the program is modified to be limited to students enrolled in eligible high demand advanced degree programs including health care, behavioral health, education, law enforcement and public safety, and others as determined by the Office of Student Financial Assistance (office). The office may begin awarding student loans under the program beginning in the 2025-26 academic year.

The office must ensure that institutions of higher education prioritize eligible students who: 

• have the greatest unmet need;
• are lowest income;
• are first generation;
• are demographically underrepresented;
• do not qualify for federally funded student financial aid; or
• received loans under the program in prior years.

The interest rates for loans issued under the program must not exceed 2.5 percent. Interest accrues on a borrowers loans during all periods, including while enrolled in an eligible higher education program. The maximum borrowing limit per borrower is set at $20,000 and the maximum loan repayment period is ten years unless as exception is granted by the office.

A report on the design, sustainability, and implementation of the program is due by December 1, 2023. The requirement that WSAC contract with an independent actuary to conduct an analysis on the sustainability of the program, including the ability of the program to operate as self-sustaining if issuing 1 percent interest rate loans, is eliminated.  The office may retain a consultant to design the loan program and one or more financial advisors to provide consultation on the sustainability of the program. The requirement that the office recommend and contract with a state-based financial institution for loan origination is eliminated. The program must have a minimum life cycle of seven years when issuing loans at 2 percent interest rates.

• Requires that the maximum interest rate for the student loan program does not exceed 2.5 percent and accrues during all periods including while enrolled in school.
• Specifies a maximum borrowing limit of $20,000 per person.
• Limits the repayment period to ten years except in cases where WSAC determines a financial hardship or other extenuating circumstances exist and revises repayment obligations.
• Eliminates the requirement that in the design of the program, WSAC recommend contracting with state-based financial institutions.
• Makes the Washington student loan account an appropriated account. Requires that appropriations from the account only be for administration of the program and issuance of new loans. Limits appropriations to $10 million annually and $50 million total.

• Modifies the maximum interest rate for the student loan program from 1 percent to 2 percent.

The committee recommended a different version of the bill than what was heard. PRO: This bill builds off the work the Legislature did last year to develop a low interest student loan program. This is more targeted and sustainable to create more access to higher education and meet student needs around healthcare and safety. Washington is a leader in the country for higher education and graduate school is a missing link. This will help reduce the cost of finding jobs in high demand fields. This bill provides access to students in financial aid deserts.

The committee recommended a different version of the bill than what was heard. PRO: Graduate students are two and a half times more likely to borrow for school than they were 30 years ago. Average student loan debt is nearly a 150 percent higher than the average balance held among all student borrowers. Students need more support to complete graduate or professional programs. The Washington Student Loan Program is a pathway towards making that support a reality.