The Washington Student Loan program would make higher education more affordable for eligible students by limiting interest rates on student loans to 1 percent, under legislation proposed by Rep. Pat Sullivan, D-Covington.
“We need to improve access to higher education for all students in our state,” said Sullivan, who represents the 47th District that includes parts of Kent, Covington and Auburn, in a House Democrats news release. “Unsubsidized federal loans or private student loans are the only option for many students. Those loans come with high interest rates, making college graduates deal with long-term debt that is difficult to overcome.”
In fact, the Institute for College Access and Success estimates more than 50 percent of the state’s 2017 higher education graduates have an average debt of $24,000. Nationally, a Federal Reserve study estimated that rising student loan debt between 2005-2014 resulted in 400,000 fewer homes bought by young adults in 2014.
“Imagine what happens to a college graduate’s credit rating when they start a job for the first time but are tens of thousands in debt,” Sullivan said. “The impact on qualifying for a mortgage, let alone paying monthly bills, is staggering. There are many people in their 30s who are still digging out of their student debt.”
Under the bill (HB 1542), qualifying students would have to be residents of the state, and a Washington state high school graduate. The loan program, slated to begin in the 2021-2022 school year, would be available for any postsecondary program that results in a certificate, associate’s degree or bachelor’s degree.
“If we can give local governments 1 percent loans for road projects, we can give students 1 percent loans for their futures,” Sullivan said.
The loan program’s funding would come from increasing the Real Estate Excise Tax (REET) on homes selling for more than $1 million from 1.28 percent to 1.5 percent, generating an estimated $60 million yearly.
“Home ownership is key to family stability and financial success,” Sullivan said. “Increasing the REET on high-end home sales will put more young people in a position to buy a house, pay taxes, and generally spend more money in our local economies.”
The bill is in the House College and Workforce Development Committee.