Washington is developing a new low-interest loan program to make it cheaper for college students to borrow money for school — and in an unusual move, the state is making it available to some graduate students, too.

The program will provide low-interest loans to low-income undergraduates and graduate students in high-demand fields of study, with an interest rate target of 1%. 

That’s much lower than what’s typically offered; current federal direct loan interest rates sit at 3.73% for undergraduates and 5.28% for graduate students, while some private student loans charge an interest rate of 10% or higher.

House Majority Leader Pat Sullivan, D-Covington, who authored the bill, said it’s an important tool to reduce the amount of debt plaguing borrowers after graduation. “I know that the best solution for ensuring the success of students after graduation is no debt, but in the current world we live in that’s just not a reality for far too many students,” Sullivan said. 

Because the vast majority of scholarships and grants are exclusively available to undergraduates, it’s common for graduate students to take out loans to finish their degrees. 

The bill creating Washington’s new loan program initially didn’t include graduate students at all, but Sullivan said they made a compelling case.


Payton Swinford is one of them — he’s the vice president of external affairs for the University of Washington Graduate and Professional Student Senate. 

“Graduate student debt has been ballooning … financial pressure is one of the most talked about hardships for the grad student population that I represent,” he said. 

According to a report from the Center for American Progress, national graduate student debt increased by 7% between 2010 and 2018, with undergraduate debt decreasing by 21% in that same time frame. 

Even though not all graduate students will be eligible for the state’s new low-interest loans, Swinford said, including at least some of them is a step in the right direction. He suggested it could serve as a model for the creation of even more financial aid options down the road. That same report says graduate students make up roughly 40% of federal student loan debt while only accounting for 15% of overall higher education enrollment each year. 

“We need to start working to address the inequities and disparities in who is able to attain graduate-level degrees,” Swinford said.

Jill Desjean, senior policy analyst with the National Association of Student Financial Aid Administrators, said graduate studies are primarily financed by debt. “Of course the earnings are expected to be higher if you have an advanced degree, but that varies greatly by the degree that you have,” Desjean said. “It’s still a lot to borrow.”

Data gathered by The Institute for College Access and Success shows that 47% of Washington’s four-year college graduates finished school with debt in 2020 — the state estimates that its more than 800,000 borrowers currently carrying debt owe an average of $33,500. Those numbers are even higher for graduates with advanced degrees: The Education Data Initiative says the country’s average debt for graduate degree holders was $71,000 in 2016 — increasing to roughly $82,800 when their undergraduate loan debt was included.


Desjean pointed out that policymakers at the federal level also seem disinterested in expanding financial aid offerings for graduate students — with the occasional proposal to scale back or eliminate existing programs altogether.

“Generally, support from the federal level is not a priority,” Desjean said.

The higher education policy board, Washington Student Achievement Council, has plenty of questions to answer before the state can roll out its new low-interest student loans, slated to begin in 2024. 

For starters, the council — working with the Office of the State Treasurer and State Investment Board — will need to fine-tune the specific terms of the loans, and ultimately recommend what share of the funding should be available to certain graduate students versus undergrads. The legislation to create the program says undergraduate students with a family income at or below the state median are eligible, prioritizing those with the greatest unmet financial need.

The state also has to determine which graduate students could be eligible in the first place; the law says only those from fields of study with workforce shortages or considered in high demand will qualify — like software development, nursing and teaching. 

The state agencies tasked with crafting the inner workings of the new lending option also have to sort out what sustainability for the $150 million program could realistically look like. They’ll submit the plan for an independent review to ensure the program can be self-sustainable with a 1% interest rate.


Mike Meotti, Washington Student Achievement Council executive director, said many questions about the newly passed legislation have yet to be answered, but that analysis and development of the program will begin this summer.

“We are still very, very early in this,” he said. 

One thing is clear, however: Meotti said no matter how the specific details pan out, students won’t have to go searching for application materials on the council’s website.

“However we implement this, we would maintain that simplicity for students,” Meotti said. “You will have access to everything from state or federal government if you go to the financial aid office at the campus you’re either applying to or that you already are a student at.”

A report outlining the details of the program and how it will work is due to the Legislature in December.