OLYMPIA – High-interest loans can no longer deter low-income families from pursuing higher education under legislation considered through the Senate Ways and Means Committee on Monday.
House Bill 1736 would create the Washington Student Loan Program, a choice for eligible residents to get student education loans in a 1% rate of interest. The program would begin providing low-interest loans in the 2024-2025 academic year.
Sen. Judy Warnick, R-Moses Lake, said the program will finish as another big expense within the Democratic budget. Spending has more than doubled in the last decade, she said, even while the legislature has held surpluses such as the current $15 billion.
“(This is an) incredible expense that we are imposing on future budgets and legislatures,” Warnick said.
Washington already has tuition assistance programs and it has more to come with the legislature now. She wondered if a program was needed once the others were already dealing with the present issue.
Sen. John Braun, R-Centralia, believes the program's funding could be better spent elsewhere. The Legislature already invests about $1.1 billion per biennium in financial help.
Braun said Washington currently ranks second among states for accessibility to higher education and keeps a tuition rate below the national average.
“We are at the very best, among the best in the country,” he said. “Spending this kind of substantial money on financial aid seems out of place-when we've a lot of other challenges in front of us.”
During Monday's meeting, committee chair Sen. Christine Rolfes, D-Bainbridge Island, amended the balance to remove the $300 million tax memo meant to produce the program. She said she wanted to allow lawmakers to accept program in another direction when they so choose.
“I'm not comfortable with a bill coming out (expecting) hundreds of millions of dollars in spending,” Rolfes said, “without knowing the certainty from the details behind the structure of the plan.
If the bill is signed into law, students who get the low-interest loan could still take out private and federal loans, but only following the state program. Eligible persons ought to be residents of the state with a family income at or below the median family income.
The loans would start bearing interest after a six-month grace period once the student is no longer enrolled in at least half of the regular schedule. There aren't any associated loan fees and also the loan cannot exceed the student's tuition.
Warnick said she was worried about the repayment plans outlined within the bill. She said she felt he lacked accountability, which people might abuse with time.
HB 1737 describes two repayment plans. The standard plan permits the borrower to repay the entire debt during a period of ten years, as the second plan obliges the borrower to pay a monthly sum not exceeding 10% of his income; after 20 years, any remaining balance is forfeited.
“Why would anyone wish to pay,” Warnick said, “if they are fully aware it will likely be forgiven after Two decades?”
She said people should pay their debts, but this bill permits people to avoid them. Warnick voted against HB 1736 at the committee meeting, later questioning his feasibility of passing that session because of the committee chair's recent amendments.
Zack Turner, executive director from the Washington Student Association, said the state's current systems have broken down and therefore are a barrier for a lot of families seeking advanced schooling. Many loans carry interest rates of 7-9%, which he sees as a tax on poverty.
“No student should have to enter lifelong debt just to pursue advanced schooling,” Turner said.
More than 800,000 Washingtonians share a collective student debt of about $28 billion, he explained. High rates of interest can result in decades of repayment, acting as a barrier towards the financial stability that college is supposed to provide.
Turner uses a future in which students don't have to rely on student education loans.
If HB 1737 is enacted, undergraduate students could receive an annual loan of up to $3,000, with a maximum total loan limit of $12,000. Graduate students could receive up to $5,000 in annual loans, with a maximum total of $10,000.
Graduate students who qualify for loans must be enrolled in a specialized field of study the state curriculum has clinically determined to have a labor shortage.
The Senate Ways and Means Committee took executive action on HB 1737 at Monday's meeting, moving the legislation to the Rules Committee for more consideration.