In an effort to address the growing student loan debt crisis, the Senate today passed legislation to establish new student debt refinancing options coordinated by the state and to offer alternatives to conventional student loans.
Sponsored by Sen. Marko Liias (D-Lynnwood), the Student Loan Relief and Reform Act would permit the Washington Student Achievement Council to contract with up to five private financial institutions to negotiate more favorable interest rates on student loan debt.
“With over 800,000 students owing more than $24 billion dollars on student loans, we must take seriously the potential ramifications on our economy and the livelihoods of hardworking Washingtonians,” said Liias. “This legislation takes a multifaceted approach in addressing existing debt and the need for innovative financing options that might help avoid excessive debt to begin with.”
Refinancing would only be available if the new agreement offers better terms than the original student loan contract.
The act would also create a pilot program for Income Sharing Agreements, which would designate a percentage of post-graduation income as a form of repayment rather than a conventional student loan structure.
“The burden of student debt post-graduation can be daunting, especially in your first years on the job market with the looming threat of late payments and defaults,” said Liias. “These agreements are an innovative way to merge the interests of students and colleges by incentivizing high-paying employment for all parties.”
Senate Bill 5774 passed on an overwhelmingly bipartisan vote of 40-8 and now moves to the House of Representatives for consideration.