Lawmakers back modest increase to veterans loan fund maximum to $8,000

Representative Brandy Pyle introduced House Bill 1135 to raise the maximum loan amount available from the state Veterans Aid Loan Fund from $5,000 to $8,000. She said the fund is a revolving, non-general-fund program that helps veterans and surviving spouses with urgent financial needs.

Lonnie Wongen, Commissioner of Veterans Affairs, described the fund’s history (established in 1943) and operational practices. He said the loan program typically carries an 8% interest rate (administratively set, with the statute allowing up to 10%) and that half the interest can be refunded to borrowers who pay on time, effectively reducing the cost to roughly 4% for compliant borrowers. He said the program reviews applicants’ ability to repay and that loans are unsecured; moving out of state complicates collections.

Wongen said the $5,000 maximum had not been changed in 24 years and that the national average for unsecured loans is about $8,018, so the department proposed an $8,000 maximum to preserve purchasing power and usefulness of the program. He said the fund’s corpus (roughly $400,000 cited in testimony) generates interest to cover administrative costs and losses.

Representative Vetter moved a due-pass recommendation; the motion was seconded and the committee carried the motion on a roll call (13-0).

Why it matters: Increasing the loan limit would expand the program’s ability to help veterans with urgent expenses and reflect inflation since the last adjustment.

What’s next: Committee recommended the bill be advanced to the full House; the Department of Veterans Affairs will continue to administer the fund and report on outcomes.